Hedge fund Grandmaster sees stock market crash in China

Former chess grandmaster-turned hedge fund manager Patrick Wolff is betting on a stock market crash in China, where he says corruption and bad debts have spiraled to dangerous levels.

Speaking to Reuters on the sidelines of the GAIM conference in Monaco, Wolff said investors were too focused on trying to work out when easy money policies will taper off in the United States and ignoring a looming correction in China.

“People are talking way too much about the Federal Reserve and not enough about China,” he said. “We’ve been saying that the US is the safest place to invest, while China is a crash waiting to happen.”

He is short on Chinese stocks and generally long on US equities.

Financial markets have sold off heavily in recent weeks on fears that US quantitative easing - money printing to fund asset purchases - will end off sooner rather than later.

However, Wolff, who is managing member of San Francisco-based Grandmaster Capital, said it was a “non-issue” as the US Federal Reserve was “highly unlikely” to tighten monetary policy without evidence of the US economy overheating.

He was speaking before Fed Chairman Ben Bernanke said on Wednesday the Fed could start to pare back its monthly purchases of US Treasuries before the end of the year if the economic rally continues.