Country: China

In September 2020, the FBI arrived at the house of a New York City police officer. They were arresting the officer, a Tibetan asylum-seeker who had arrived in the US at 17 years old, on charges of spying for the Chinese community party. He may have been spying, but he wasn’t a great spy

Last week was a big one for Tesla. It became just the 6th American company to reach the $1 trillion market cap and did it with far less revenue than any of the 5 that have come before it. The market expects big things from Tesla. In this research report released last week, Morgan Stanley upped their price target from $900 to $1,200 per share (when released shares were around ~$1,000) and made the case that this price is based on a conservative case (in particular, half the company’s growth target, constrained growth in China and no improvements in autonomous driving).

Jim Chanos is a famous market short-seller who built a reputation on predicting the collapse of Enron early and shorting the stock. For the past decade, Chanos has been a skeptic of China’s economy and in particular, of their real estate boom.

Aikya is a UK-based fund manager that looks for long-term opportunities in emerging markets. In this investor letter they’ve written about the risk of investing in China - using the analogy of foie gras, as the Chinese state fattens up companies and mints billionaires only to decide to consume them when they get too large.

Over the past few weeks, the world has been watching the Chinese real estate market and wondering if the debt problems there will spread to the rest of the economy, or even the rest of the world. In this explainer, the authors try to unpack what could happen next and why the possibility of an Evergrande collapse may not be the catastrophic event some market watchers predict.