One of the most prominent hedge fund managers in America is betting that the economic troubles surrounding China are far from over. He speculates that these economic troubles are linked to the United States Dollar as well as other Asian currencies. If he’s predictions are right, both the commodities and equities markets will be affected.
About Kyle Bass
Kyle Bass founded a Dallas based fund known as Hayman Capital Management. In 2006, he amassed a lot of wealth and made headlines after his predictions on the 2008 mortgage crisis were correct. Critics noted that Bass was some sort of genius who couldn’t do anything wrong. However, he has made some bad decisions including the bet on the economic demise of Asian currencies.
According to a recent article posted on the Wall Street Journal, Bass’s company, Hayman Capital Management, sold most of its investments in commodities, bonds and stocks. This measure enabled the company to entirely focus on shortening Asian currencies that include the Hong Kong and Yuan Dollar. The article also noted that about 85% of the company’s portfolio is invested in trades that will absolutely pay off if both Hong Kong and Yuan Dollar depreciate in the next 3 years.
Kyle Bass’s Recent Interviews
In an interview that was broadcasted on Wall Street Week, a FOX Business Network owned program, Bass had some words to say regarding his investment opinion. He spoke about how his main focus is Asian currencies and how he expects the currencies to depreciate in economic value.
Basically, Kyle Bass predicts that the United States Dollar will gain more value after Asian currencies fall. His bet didn’t pay off at the beginning of 2016, but his investment timeframe is quite long to allow him to monitor the periods of Asian currency strengths and dollar weakness. In an interview conducted on 1st July, Bass assured investors that the corporate bond market of china valued at $3 trillion is freezing up due to the debt sales and rising defaults.
In another interview with Real Vision, Kyle Bass spoke about how China’s lending binge has created a big macro imbalance that has never been recorded in the world history. Bass is certain that bank losses worth $3 trillion will trigger a huge bailout forcing the central bank to slash reserve requirements.
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