China’s Dirt Cheap, But Hedge Fund Manager Doug Kass Wonders If US Stocks Could Follow

The latest data out of China, a weaker-than-expected August non-manufacturing index reading, suggests that China’s third quarter real GDP growth may be 6.5% or lower, says hedge fund manager Doug Kass in his latest missive about China.

Reported by Rashema Kapadia,  While Kass, head of Seabreeze Partners, says the Chinese stock market is in bear market territory, the slower Chinese growth hasn’t swayed global markets as much as he would expect. But Kass writes that the rapid pace of the decline in economic activity “is probably now at a tipping point for the world’s non-Asian markets.”  While next month’s leadership change in China may come alongside some monetary easing, he says it may be too late.

Many investors have noted the cheapness of the Chinese market but have also said that many of the higher-quality stocks are not that cheap yet. Last week, the Economist mentioned a paper co-authored by IMF economists on the impact of a hard landing in China.

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