Short seller Carson Block is heading to India to look at starting a fund focusing on the country’s stocks, as he stays away from joining a rally in China’s market.
“India is going to be a major theme” for the finance industry, just as China was, “so a wall of money will be thrown at India,” Block, the chief executive officer of Muddy Waters Capital LLC, said in a Bloomberg TV interview on Tuesday in Singapore.
Block and his Muddy Waters business partner Freddy Brick are going to India next week on their first trip to meet brokers, funds and business people in Mumbai to understand the country’s investing landscape. He is thinking of launching a long-short fund there, though is concerned over India’s rules on taxing capital gains.
His interest in India comes as foreigners have been selling Indian equities for most of this year, withdrawing more than $10 billion through Feb. 13 amid a tepid earnings and growth outlook. Short sellers borrow shares with the expectation of buying them back and returning them once a company’s stock price has plummeted, pocketing the difference.
Block’s Muddy Waters firm rose to fame by uncovering fraud at some Chinese firms. He cited geopolitical risks and unreliability in corporate accounting as the key reasons to remain cautious on China. The country’s equities have rallied this year as Xi Jinping’s signals of support for the private sector add fuel to optimism over DeepSeek’s artificial intelligence capabilities.
Chinese company “numbers cannot be trusted and then there is risk of a potential military conflict between China and Taiwan,” Block said.
Block, a long-time China skeptic, warned investors about buying Chinese stocks in October. Since then the MSCI China Index has gained about 10%.
With assistance from John Cheng.
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