China May Undergo A Financial and Political Crisis, from Sushil Kedia

This is the essence of China views espoused by the Palindrome in person on a live interview on CNBCTV18 an hour ago. He mentioned clearly that growth does not reach up to the heavens. Indonesia too had two decades of rapid growth but could not handle the corrective period due to an inappropriate political structure. That lead the country to a crisis of giant proportions. China, per him, has similar inherent structural deficiencies. I interpret this as an affirmation of my own long-standing belief that China is best viewed as a weightlifter with arthritic knees, desperately pumping iron, impressing everyone around.

According to the Palindrome, the Chinese rulers are very nervous now and that makes him wary of China even more. Does he expect China to go through a crisis? He said “not in the immediate future.”

The next question asked of the Palindrome was whether the investments of his funds reflected his India bias and his answer was somewhat “yes.” Add to this the fact that he laughed out loud and said “no” when the anchor asked him if his India exposure is as much as a billion dollars? So a safe inference is that his exposure to China on a net long basis is certainly substantially lower than a billion dollars also.

His funds have some large exposures to a few companies in Indian real estate, retail and pretty much in CNBC India itself. He left it at saying that he doesn’t interfere in investment selection at this level and leaves it to his team of experts. His concern for India was that there are indeed stark dualities with large sections of population being underserved (he mentioned he doesn’t like to use the word underclass) and that the growth story in India needs to take care of correctly distributing money internally.


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