Kyle Bass is going for broke on a currency trade that has burned bearish speculators for more than three decades. Hedge fund veteran Kyle Bass is betting against the Hong Kong Dollar, in expectation that the US will remove a key peg against the dollar, Bloomberg reported. Financial Secretary Paul Chan said last month that China’s central bank could provide American dollars should the U.S. impose sanctions on the territory. Citing high levels of financial leverage, he has compared the Chinese territory to Iceland and Ireland before those nations' banking systems imploded in 2008.Hong Kong Financial Secretary Paul Chan said this month that the city is ready to defend the exchange rate and that mainland China could provide U.S. dollars through a currency swap line should Washington impose sanctions.While few doubt that Hong Kong faces serious economic and political challenges, the city's currency shows little sign of imminent collapse. Local deposits climbed in April, while Hong Kong home prices have slipped just 5% from record highs in 2019. A vocal critic of China’s Communist Party, the 50-year-old investor wrote in a Newsweek op-ed last month that Hong Kong has become “ground zero for the ideological clash between democracy and heavy-handed Chinese communism.”Kyle Bass is going for broke on a currency trade that has burned bearish speculators for more than three decades.That could be a serious problem for Bass's investors since, as Bloomberg points out, the insane leverage ratio means that losses will be 100% if the peg isn't broken within 18 months.Hong Kong Financial Secretary Paul Chan said this month that the city is ready to defend the exchange rate and that, if necessary, the mainland would backstop the peg via swap lines with the PBOC. While the strategy is designed to generate outsized gains if Hong Kong's currency tumbles against the dollar, investors stand to lose all their money if the peg is still intact after 18 months.Kyle Bass is going for broke on a currency trade that has burned bearish speculators for more than three decades.Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.Mr. This week, protests in Hong Kong … When we first published Kyle Bass's "the Quiet Panic" back in April 2019, the investing community laughed off Bass's leveraged bet against the HKD's peg to the dollar as a novelty, and blasted Bass as a washed-up sinophobe who spends his days hanging out with Steve Bannon in an empty aircraft hanger. And Bass is no stranger to Hong Kong’s financial system.
Bass is now raising money for a new fund that will lever up by 200x to bet on a collapse of Hong Kong's famed currency peg to the U.S. dollar, reports Bloomberg. Mr. Bass declined to comment.Mr.
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