Renowned founder of Muddy Waters Capital LLC, Carson Block, is set to travel to India to consider establishing a fund focused on Indian stocks, as he is pessimistic about the recovery of the Chinese stock market.
In an interview with Bloomberg TV in Singapore on Tuesday, Muddy Waters Capital LLC CEO Block stated, “India will be the main theme in finance,” like China was once, adding that “a large amount of capital will flow into India.”
Block, along with his Muddy Waters business partner Freddy Brick, will be traveling to India next week to meet with brokers, funds, and businessmen in Mumbai to understand the country’s investment environment. This will be their first such trip. Block is considering launching a long-short fund in India, but he still has concerns about the capital gains tax regulations there.
Muddy Waters, under Block’s leadership, gained prominence for exposing fraudulent practices of some Chinese companies. Block highlighted that geopolitical risks and unreliable corporate accounting are the main reasons for his cautious approach towards China.
He also mentioned that Chinese companies’ financial figures are “unreliable” and there is a risk of military conflict between China and Taiwan.
Block has long been skeptical of the Chinese stock market and is one of the most prominent short sellers of Asian stocks. During an interview with Bloomberg TV on October 20, 2024, he reiterated that the Chinese stock market is “not investable.” Despite the Chinese government’s announcement of stimulus measures by the central bank and the Shanghai-Shenzhen 300 Index rising by 25% within five days, Block pointed out that governance issues within Chinese companies, policy unpredictability, and geopolitical concerns remain significant obstacles for the Chinese stock market.
At that time, Block stated, “In the medium to long term, I still don’t see why investing in China makes sense.” He also added that he has no view on the short-term prospects of China.