HK faces 'severe' economic decline, Kyle Bass says

Business | 3 Oct 2019 1:12 pm

Kyle Bass, founder of Hayman Capital Management, said Hong Kong faces a “severe” economic decline as anti-government protests escalate, Bloomberg reported.

The Dallas-based hedge fund manager, who is betting that Hong Kong’s currency peg will break, said the former British colony’s economy is being drained of liquidity.

Hong Kong’s foreign exchange reserves will worsen for September and October and a significant amount of capital and investment will leave in the next 12 months to 18 months, he told a conference in Amsterdam on Wednesday.

Hong Kong’s economy is a “giant question mark,” Bass said. Traders including Bass are betting the unrest will spur capital flight, driving up interest rates and forcing the abandonment of a currency policy that has underpinned Hong Kong’s economy for more than three decades.

Protests worsened this week as police battled across Hong Kong in some of the most serious clashes since widespread unrest began in June, with a demonstrator shot by police.

Bass runs a Hong Kong-dedicated hedge fund. He rose to prominence by successfully betting against mortgages during the financial crisis.

Turning his attention to China, Bass said Chinese companies raising capital in the U.S. should face greater scrutiny, and he would personally never invest in the country’s internet giants.

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