‘Big Short’ investor Michael Burry has issued a stark warning to investors in Chinese tech giants, claiming the structural integrity of Hong Kong-listed stocks is fundamentally flawed.
In a series of posts on X on 3 March 2026, the founder of Scion Asset Management argued that many who bet on firms like Alibaba and JD.com do not actually own the companies.
Burry highlighted the use of Variable Interest Entities (VIEs)—Cayman Islands shell companies with no actual operations—as a critical vulnerability.
‘First we must take a considerable detour and fully examine a vulnerability that applies to almost all these stocks,’ he wrote. ‘For all of the above but BYD and Haidilao, the actual shares bought by investors are shares of a Cayman Islands shell company with no operations.’
The warning comes as Burry liquidates his remaining Chinese holdings, shifting toward a bearish stance as the Hang Seng Index continues to trade below its 2007 peak.
Burry thinks Hong Kong stocks are currently in the ‘dumps’ and have been struggling for a while. He also highlighted a divergence between corporate revenue and stock performance.
The famed investor explained that Netflix, Broadcom, and Tencent also witnessed revenue growth of up to five times in the past 10 years, but Tencent’s stock has ‘almost exactly a 0% return’ over the last five years.
‘This is the problem. All of Hong Kong’s massive tech stocks became massive since 2007, and the Hang Seng is today ~27,000, 15% lower than 2007,’ he said, adding that the ‘easy credit environment’ and the potential for government intervention ‘undercut the economy’ and impacts foreign direct investment, regardless of the drive of the Chinese workforce.
Referring to his Asia Fund letter to investors in 2005, Burry said that while he accurately tracked the emergence of ‘global ambitions’ in firms like Alibaba and Tencent decades ago, the current ‘numbers game’ has shifted.
He warned that traditional measures often fail to capture the impact of a paradigm shift until the ‘impact is imminent,’ suggesting that valuations of these shell companies also deserve a ‘deep look into vulnerabilities, virtues, and value.’
Burry has been sceptical of Chinese tech stocks since last year as his Scion Asset Management liquidated most holdings and increased its bearish bets on China in Q1 2025.
‘US Megacap Tech Stocks Artificially Inflate Earnings’
In the US, Burry claimed that tech firms, including Microsoft, Meta Platforms, Oracle, Amazon, and Google’s parent company Alphabet, use extreme accounting tricks to hide the real costs of AI infrastructure buildout and related technological investments entirely.
Burry said these companies are ‘understating depreciation’ to protect their bottom lines. He believes these firms are maintaining the value of their AI hardware by artificially extending the ‘useful life’ of chips and servers, thereby keeping expenses off current income statements.
‘Now you are engaging in accounting tricks to hide expenses, to protect earnings. You will be tortuously adjusting your earnings in new and sinister ways,’ Burry wrote. ‘A question I have for $ORCL, $GOOG, $META, $MSFT, $AMZN, $NVDA, $CAT, and all the rest, “When does the spending for AI data centre buildout actually end?”‘
‘It is consuming all your cash flow, you are borrowing, you are financing in ways you never have, apparently because it is so urgent, because it scales? But if it scales, when does it end?’ Burry asked AI leaders in his social media post.
Disclaimer: Our digital media content is for informational purposes only and does not constitute investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks, and past performance does not guarantee future returns.