New York (HedgeCo.net) – Everyone knows the story of the Chinese stock market this year—up almost 60% through the first five and a half months only to come tumbling back down over the last three and a half months. Rather than rehash what has happened, why not get a breakdown of why it happened from a noted hedge fund manager that has been bearish on the Chinese market for some time now.

Jim Chanos and his firm Kynikos Associates are well-known for cautioning investors about China’s stock market. On Tuesday, Chanos participated in a debate at the China Institute in New York and he gave a breakdown of what happened. Business Insider featured a story on the debate and here are some highlights of what he had to say:

“What made 2015 a little more important,” Chanos said, “was the impact of the Fed interest-rate decision … The possibility of an RMB [yuan] policy decision in August … and the government’s missteps in handling the stock market run-up and drop.” Together, he continued, those issues created a “heady witches’ brew of changing perceptions on China.”

Chanos went on to state that “This is going to be a slow-motion unwind. This is not going to be smoking ruins tomorrow.” Sounds like he is still bearish on China and he sees the overall market continuing downward, but he is not expecting a total collapse.

Rick Pendergraft
Research Analyst
HedgeCoVest