Michael Novogratz, principal and director at the $41.6 billion alternative investment firm Fortress Investment Group, sounds more like a China bear than a fire-breathing dragon these days. “It’s time to start worrying a little bit about Asia,” he told attendees at the SkyBridge Alternatives (SALT) Conference in Las Vegas last month.
“And if we worry a bit about Asia, it puts the whole global growth story into question.” Novogratz said the world is headed for a bumpy recovery and that if China does not move quickly to revalue its currency, as the U.S. has been pressuring it to do, the recovery will be all the bumpier. “You can almost rest assured there will be a trade war that starts within the next six weeks,” he said. “That will be bad for Asia, and it will be bad for the U.S.”
Other macro managers echo these fears. “China has been importing a monetary policy which is not compatible with its long-term stability,” says Jason Bonanca, head of strategy and research at $3.47 billion hedge fund firm MKP Capital Management. Renowned short-seller James Chanos has also publicly expressed concerns about China, as has former Paulson & Co. executive Paolo Pellegrini. Says Bonanca: “There is a group of people — and it is a growing group — who are worried.”
