Kyle Bass, the founder of American hedge fund Hyman Capital Management, has repeatedly talked about the Hong Kong dollar in the past, which has attracted a lot of attention.
He set up a new fund in June last year, betting that the Hong Kong linked exchange rate will be decoupled within 18 months. He also said that the fund will use option contracts to leverage 200 times for the new fund.
Over the past 18 months, foreign media reported that Kyle Bass suffered heavy losses from short selling Hong Kong dollars, and that the funds came from Guo Wengui and Bannon affiliates.
Bloomberg quoted SEC filings as saying that Kyle Bass suffered heavy losses from short selling Hong Kong dollars.
234 million investment may evaporate more than 95%
According to "Bloomberg", a recent case disclosed by the US Securities and Exchange Commission (SEC) revealed Kyle Bass's short selling of Hong Kong dollars.
The regulator said that in June 2020, GTV’s parent company Saraca Media Group transferred US$100 million of funds to an unnamed hedge fund that holds positions in Hong Kong dollars and other Asian currencies.
According to SEC data, the fund lost more than 95% of the US$30 million invested (HK$234 million).
The report quoted two people familiar with the matter as saying that the hedge fund is managed by Kyle Bass' Hayman Capital Management, and pointed out that GTV Media Group is related to the exiled Chinese wealthy Guo Wengui and Trump's former adviser Bannon.
GTV Media Group is alleged to be associated with the wealthy Chinese businessman Guo Wengui (left) and former Trump adviser Bannon (right).
``Chinese Skeptics'' high-profile sing down the Hong Kong dollar in 2019
Speaking of Kyle Bass, he has been a Chinese skeptic for a long time. Starting in 2019, he expressed high-profile bearishness on the Hong Kong dollar. At that time, the social movement broke out in Hong Kong and the political situation was unstable.
According to Bloomberg's previous report, when GTV was issuing shares, Hayman was launching a new strategy of desperately betting that the Hong Kong dollar linked exchange rate system would collapse.
Kyle Bass made one of his boldest bets in this area last year, looking for investors for Hayman Hong Kong Opportunities Fund, LP-Prodigious Series.
According to a promotion document that Bloomberg saw at the time, the fund planned to use option contracts to leverage 200 times leverage to bet on a sharp drop in the Hong Kong dollar against the US dollar.
One reason for Kyle Bass's short selling of the Hong Kong dollar is that Hong Kong's property prices are high and the level of leverage is high.
Looking at the information, Kyle Bass concluded a short-selling RMB transaction that lasted for nearly four years in 2019, saying that the action of short-selling China "goes more into the political realm than the financial realm."
However, in an interview with Bloomberg in May of the same year, he revealed that the company was buying U.S. dollars and shorting Southeast Asian currencies, and the Hong Kong dollar was the key target.
He criticized at the time that Hong Kong’s property market is the most expensive in the world and one of the world’s most leveraged economies. In addition, on the political level, the CCP’s active promotion of the Fugitive Offenders Ordinance in Hong Kong will force a large number of foreign companies to move out and severely hit The Hong Kong economy and exchange rate are stable.
However, under the linked exchange rate, the Hong Kong dollar against the US dollar has been fluctuating within the range of the exchange rate mechanism. The latest report is 7.779.
As of the end of last year, Hayman had $304 million in assets under management. According to the Wall Street Journal, Hayman had $2.3 billion in assets under management in 2014.