Hugh Hendry Embraces Imagined Realities
"There are times when an investor has no choice but to behave as though he believes in things that don't necessarily exist. For us, that means being willing to be long risk assets in the full knowledge of two things: that those assets may have no qualitative support; and second, that this is all going to end painfully."
China is set to record its weakest growth in GDP in 25 years. Yet it seems to have entered a bull market and may be where we deploy much more of our risk capital next year. That's because the recent exuberant run up in onshore Chinese equities seems to me to amply demonstrate the power of imagined realities.
Fast forward past the -45% decline in 2015...
China, Hong Kong, Australia with China GDP:
Imagined oil recovery
WTI with C$:
Imagined recovery aka. hardest landing