Hedge Funds with Chinese Characteristics – the New Normal

Red Kite, Shanghai Chaos, Lord Copper, Evelyn Waugh, George Soros, Shorts, Chinese economy, copper down 7pc, deflation, depression, recession, China.

Could we have dreamt all this up? Were all these names suddenly mixed up together?

Well here is the story as I understand it, and then what might be the real story.


So Copper and Hedge Funds. Whats up?

It appears to be that Copper went down 7pc and the market thinks Chinese Hedge Funds jumped on sentiment and over exposed funds eg. Lord Copper of Red Kite, to hit the price with totally legal short selling, creating a 7 pc drop in one day.

One of the accused is a company called, so they say, Shanghai Chaos – what a wonderful name.

Before you jump to arms against China short selling remember George Soros and pals broke the Asian tigers and others with the same trick 15 years ago, and broke sterling, and walked off, legally, with billions, if not trillions.

Remember for all the fortunes lost with Lehman there were people on the other side cleaning up, or, in the case of taxpayers, footing the bill.

Making money out of these situations is an anomaly of modern capitalism. It is legal and allowed. However dangerous. Adam Smith would be the first to say – I told you so. Everyone should read his work the Theory of Moral Sentiments about how greed would destroy the benefits of Capitalism if left uncontained.

Did the Chinese do it? Are they greedy? Maybe and some of them are greedy. But that is not the real story.

The West has yet to wake up to China playing its own game and playing our game. Their game is Common Prosperity across Asia and through to Central and Eastern Europe. Their way is BRICS Bank, AIB, SCO Bank, support to Latin and Central America.

But they are also going to play in our Western world according to Western rules. Because they are not fat on the accumulated profits, and they are a meritocracy in this respect, they will wipe us off the floor if we are not careful . You cannot legislate against Chinese being in the game. It is racist. You cannot do a Washington on Huawei and declare them a state organisation and therefore illegal. It would not stand examination.

They are game for the game and we better respect and understand them.

The Chancellor needs to get his people who are “examining” and “advising” the Chinese on Shanghai and other Free Trade Zones” to focus on understanding Chinese Private Equity and Hedge Funds. There are rumoured to be 6000 Chinese Private Equity firms.

They are the ones using the Free Trade Zones for Capitalism Chinese style.

We are but babes in the woood. Xi is not Putin. China is not Russia, the Yuan is not the Rouble.

China is for real and a great ally and a formidable adversary.

The Silk Roads and Ocean Belt are there for us to benefit from, as the Chinese benefit from our markets. Lets get at those markets, but over there, not from here.

Categories: China growth, Chinese Foreign Policy, Currency

Tags: , ,

%d bloggers like this: