HKD

Re: HKD

Postby winston » Thu Jun 11, 2020 7:58 am

Hedge fund honcho Kyle Bass uses 200-times leverage betting HK dollar will crumble

A year ago, Hayman Capital Management’s Kyle Bass wrote about “the quiet panic in Hong Kong” and warned of an “impending crisis” in the region.

Now, amid mounting unrest, he's putting his clients’ money — and then some — on a bet that the local currency will collapse.

According to Bloomberg News, Bass is launching a new fund that will use option contracts to leverage the assets by 200 times in an “audacious” all-or-nothing position that will lose investors all their money if Hong Kong’s currency is still pegged to the U.S. dollar after 18 months, MarketWatch reports.

His fund, however, will return outsized gains if his call for the demise of the peg, a prediction that has caught investors like George Soros on the wrong side in the past, comes to fruition.

Bass told investors that the fund could see a 64-fold return if the currency drops by 40 percent, Bloomberg News reported, citing a person familiar with the matter.

Options data included in the story shows that markets are pricing in a 6 percent chance the currency will break 7.90 in 12 months, outside the weak end of its 7.75-to-7.85 trading band against the US dollar.

Bass, who has been shorting the currency for more than a year, has said he expects a “full-fledged banking crisis” in Hong Kong by the end of this year, due to high levels of financial leverage along the lines of those seen prior to implosions of the banking systems in Iceland and Ireland.

President Donald Trump last month said that his administration would begin to revoke Hong Kong's special status.

Hong Kong is currently exempt from tariffs levied on Chinese imports, and the Hong Kong dollar is freely exchangeable for U.S. dollars.

Source: The Standard

https://www.thestandard.com.hk/breaking ... ll-crumble
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Re: HKD

Postby winston » Thu Jun 11, 2020 8:01 am

HKD brushes off big Bass bet against peg

American hedge fund manager Kyle Bass has launched a new fund that will make all-or-nothing wagers on a collapse in Hong Kong's currency peg, Bloomberg reported.

But Hong Kong Monetary Authority deputy chief executive Arthur Yuen Kwok-hang, speaking to the media yesterday, said the fund is already suffering from mark-to-market losses, as the local currency has been strengthening.

The founder of Hayman Capital Management, best known for his prescient bet against subprime mortgages before the 2008 financial crisis, will use option contracts to leverage the new fund's assets by 200 times, the people said.

Bass, who wrote last month that Hong Kong has become "ground zero for the ideological clash between democracy and heavy-handed Chinese communism," told investors the fund could see a 64-fold return if the currency falls by 40 percent, according to Bloomberg. Investors stand to lose all their money if the peg remains intact after 18 months.

The HKMA has said that those shortselling Hong Kong dollar misunderstand the peg system.

In fact, the de facto central bank sold another HK$2.21 billion worth of Hong Kong dollars yesterday evening as the currency strengthened to its trading limit, the ninth time in June. The aggregate balance of the local banking system is expected to increase to HK$120.62 billion.

Yuen said the trend probably would continue at least till the end of June for initial public offering activities, while listed companies require capital for dividend payment.

Stressing that the Hong Kong dollar has not reached the weakest trading limit in the past year, Yuen said there is no serious capital outflow from the local currency.

Banks' deposits in April rose HK$146.2 billion compared with last year after a 2.9 percent rise in 2019. He added that it is meaningless to analyze Hong Kong fund flow with respect to deposit rises in Singapore, as the latter can be explained by an influx of capital from different parts of the world.

Citing banks, Yuen said there have been inquiries regarding opening offshore accounts, but not many people taken action and there was no significant rise in exchanges between Hong Kong dollar to the greenback.

Although being affected by the pandemic, he added Hong Kong banking asset quality is stable and healthy even compared with the United States, the United Kingdom and Singapore.

So far, more than 30,000 mortgage principal moratorium cases have been approved by banks, involving over HK$380 billion, and more than 6,300 applications involving over HK$12 billion were approved for the Special 100% Loan Guarantee scheme.

Source: The Standard

https://www.thestandard.com.hk/section- ... gainst-peg
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Re: HKD

Postby behappyalways » Sat Jun 13, 2020 8:08 pm

Hong Kong Defends Dollar Peg for 6th Day, Longest Run Since 2014
https://www.bloomberg.com/news/articles ... emium-asia
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Re: HKD

Postby winston » Mon Jun 29, 2020 7:19 am

Buckle up for tough second half

by Andrew Wong

For starters, don't get too excited about the Hong Kong dollar's strength, because Hong Kong stocks were very strong before they peaked in August 1997, as well as in November 2007, before the plan for the through-train stock trading scheme was dropped.

In 1997, there was even the concept for new stocks and regional funds poured into Hong Kong because currencies such as Thai baht were being attacked.

But it can take less than a week for the Hong Kong dollar to weaken rapidly. Current capital inflows into the Hong Kong dollar and the inflows before the financial crises of 1997 and 2007 are all of the same nature - hot money seeking quick profits.

Once profits are earned or an impending crisis is perceived, investors will quickly drain away cash without a second thought. Therefore, the so-called strength of the Hong Kong dollar should not be confused with whether there is a potential financial crisis in Hong Kong or not.


Source: The Standard

https://www.thestandard.com.hk/section- ... econd-half
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Re: HKD

Postby winston » Wed Jul 08, 2020 10:29 am

US State Department Explores Limiting HKD Peg, Talks Not Elevated to White House Level Yet: Rumors

Some top advisers to US President Donald Trump suggested undermining Hong Kong's linked exchange rate system, in response to China's push for the national security law, Bloomberg citing sources.

While some advisers had proposed limiting the ability of Hong Kong lenders to buy US dollars, others voiced objection on concerns that Hong Kong banks and the US, rather than China, would be hurt by such a move.

The discussions among US State Department advisers had not been elevated to the levels of the White House, meaning it had not gained serious traction yet, according to sources.

Source: AAStocks Financial News
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Re: HKD

Postby behappyalways » Mon Jul 13, 2020 11:47 am

2020.07.011【文茜世界周報】美制裁港 傳瞄準聯匯制度打擊港元
https://www.youtube.com/watch?v=uI-ZqTgmkvw
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Re: HKD

Postby winston » Wed Jul 15, 2020 6:00 am

HK's US Peg Remains

Top advisers to Trump have ruled out undermining the Hong Kong dollar's peg to the greenback as they seek to punish China, for infringing on the territory's political freedoms, Bloomberg reported according to people familiar with the matter.

They dropped the idea of limiting Hong Kong banks' access to US dollars after advocates could not gather enough support, with those against the move concerned that it would be difficult to implement and could hurt the United States, according to one of the people.

Source: The Standard
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Re: HKD

Postby behappyalways » Sat Jul 25, 2020 3:01 pm

HSBC and Hong Kong’s Dollar Peg Face a Reckoning
https://www.bloomberg.com/opinion/artic ... nd=opinion


Donald Trump unlikely to target Hong Kong dollar peg to US dollar, says former top diplomat
https://www.scmp.com/news/hong-kong/hon ... dollar-peg
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Re: HKD

Postby winston » Tue Aug 10, 2021 6:14 pm

What it means for Hong Kong if the world turns against the US dollar

The safe-haven buying propping up the US dollar will recede. As inflation worries grow, a lax Fed response could turn currency markets away – leaving the Hong Kong dollar at risk

Hong Kong’s currency is pegged at between 7.75 and 7.85 to the US dollar.

The Volcker-led Fed crushed inflation as it raised the Fed Funds rate as high as 20 per cent in 1981. The early 1980s saw the US dollar soar.


Source: SCMP

https://www.scmp.com/comment/opinion/ho ... -us-dollar
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Re: HKD

Postby winston » Thu Oct 14, 2021 2:50 pm

Kyle Bass’s Disastrous Hong Kong Short Got Bannon-Linked Cash

by Tom Schoenberg, Matt Robinson and Joshua Green

The fund went on to lose more than 95% of the $30 million it invested.


Source: Bloomberg

https://finance.yahoo.com/news/kyle-bas ... 27232.html
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