Billionaire short-seller Jim Chanos just announced a new short position in a South Africa-based telecoms company.
The Kynikos Associates founder announced he was short MTN Group at the 2016 Ira Sohn conference Wednesday.
Really, though, Chanos used the announcement as an opportunity to explain why he is bearish on Africa, more broadly.
It has to do with China.
Essentially, Chanos said, the mining industries in countries like Nigeria and South Africa have been heavily dependent on investments from China in recent years.
Now China is starting to pull out, and “that’s going into a tailspin,” he said.
Countries like Nigeria face other macro problems, too, in Chanos’ view. He said Nigeria is “rapidly” running out of foreign currency reserves.
“If oil prices stay down … we’re going to be having a big problem in 2-3 years,” he said, calling that country a “borderline failed state.”
South Africa, meanwhile, faces infrastructural problems like network outages.
Chanos said he was shorting MTN Group because 70% of their EBITDA comes from Nigeria and South Africa – and almost half from Nigeria alone.
He noted that some of the other countries MTN is exposed to include Uganda, Sudan, Syria, and Iran.
Chanos also confirmed his short positions in Tesla, Valeant, and Alibaba on Wednesday.