Some big US hedge funds, including Hayman Capital Management and PointState Capital, are stacking up bearish bets against China’s currency, the renminbi, the Wall Street Journal reported.
Hayman Capital has sold off the bulk of its investments in stocks, commodities and bonds so it can focus on shorting Asian currencies, including the yuan and the Hong Kong dollar, according to the report.
It is the biggest concentrated wager that the Dallas-based firm has made since its profitable bet years ago against the US housing market, the paper said.
About 85 percent of Hayman Capital’s portfolio is now invested in trades that are expected to pay off if the yuan and Hong Kong dollar depreciate over the next three years, it said.
“When you talk about orders of magnitude, this is much larger than the subprime crisis,” Hayman Capital’s founder Kyle Bass was quoted as saying.
Billionaire trader Stanley Druckenmiller and hedge-fund manager David Tepper have staked out positions of their own against the Chinese currency, the Journal cited sources as saying.
Druckenmiller, who now invests his own wealth, and one of his former protégés, Zach Schreiber, who runs the hedge-fund firm PointState Capital, have had sizable shorts against the renminbi since last year, according to the sources.
David Einhorn’s Greenlight Capital is also said to hold options on the yuan depreciating.
Billionaire investor George Soros predicted at the World Economic Forum gathering in Davos recently that “a hard landing is practically unavoidable” for China’s economy.
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