Who would be crazy enough to bet against the Chinese? The Chinese have more money than any other country, and they deal in micro-cents when they negotiate. The Chinese are known for being shrewd investors, smart business people and people that don’t like to spend money. But hedge fund investors like Kyle Bass, George Soros, and others are investing billions that the penny-pinching Chinese will have to spend trillions to get their economy moving again. They must keep their currency stable as well as make sure their stock market doesn’t collapse.
The issue is, the Chinese banks have a lot of debt. Most of that debt is not secured by firm assets. The banking system has $31 trillion in assets, but the economy is only $10 trillion. The Chinese stock market is in ruin, and the government is spending billions to keep it from collapsing. The government has also stopped local investors from buying foreign assets. And the government spent billions in 2015 to keep the yuan from collapsing. All in all, China is in trouble, and it will implode financially within the next two to three years, according to Bass.
Even though Bass has several wins in his favor, he isn’t always right. Bass and his hedge fund investment firm, Hayman Capital Investments, may have more than 80 billion in assets under management, but not all their recent investments have made partners happy. The negative press the firm and Bass is getting for shorting drug stocks after Bass and his partner Erich Spangenberg question drug patent in front of the patent committee hasn’t be accepted very well.
Bass did make money in 2015. That’s when he shorted the euro against the dollar. Bass was also criticized for supporting President Christina de Kirchner of Argentina when she defaulted on government bonds back in 2010. Bass took de Kirchner side even though four hedge funds were trying to get more than the 30 cents on the dollar that de Kirchner offer as a settlement. Bass was also the topic of bad press when he sided with General Motors after the airbag and power steering issues caused 13 deaths. Bass defended GM because Hayman Capital was GM’s largest stockholder at the time.
There’s no doubt that Kyle Bass is a controversial investor as UsefulStooges has reported. Anyone that has made billions investing against the established system always has detractors. But Bass continues to be Kyle Bass regardless of those detractors.