Hedge fund leader and financial blogger, Kyle Bass, has an incredible theory about what will happen to the Asian credit growth over the next few years, and he also has a trade tactic to match this. The founder and the managing partner of the globally acclaimed Hayman Capital Management explained to the CNBC’s Power Lunch. He said that Chinese commercial banks have outsized the country’s Gross Domestic Product. The suave hedge-fund manager said that an imminent natural result of this would be a consequential loan-loss cycle.
He said that when this happens, the credit-fueled escalation in Asia will be forced to take a breather and experience a little decline. The business magnate said that there were very many institutions in Asia, especially China that lend loans aggressively to China. He predicts that as a result, Asian banks will experience severe difficulties over the next few years, but he also expects that not to linger for a long period. He further clarified that local Chinese and Japanese banks will not be hard hit like other financial institutions around Asia that lend loans to China.
However, the renowned financial forecaster declined to provide any specific names of the financial institutions that he had in mind. Bass forecasts that local Chinese banks have grown too big and hence they will ultimately “mislay all their equity.” However, he acknowledged that China has the potential to deal with the crisis through its mega financial resources as well as a government dedicated to recapitalizing its local banks. He said that this financial crisis will bring the end to the China’s constant double-digit credit growth.
The financial expert noted that the Chinese crisis will not be good news for the rest of the world either. He said that if China’s credit is not growing at double digits, then the same case will happen to the rest of non-Japan Asia. That crisis could bring down other Asian financial institutions.
Kyle Bass’ Track Record
Kyle Bass is by far the most favorite hedge-fund manager for Argentine autocrats. Bass launched his Dallas-based hedge fund, Hayman Capital Management, in the year 2006. The brilliant investor made his fortune and got featured in international business headlines when he wildly predicted the 2008 subprime mortgage mayhem.
Though he has faced a lot of controversy, including the article at UsefulStooges.com, which points out several of the problems Bass has had in his career.