Via Reuters – “Improbable bets on break of Hong Kong dollar peg adding up”

The end of the Hong Kong dollar peg becomes a talking point every few years.

The latest talking head is hedge fund manager Buill Ackman, founder and CEO of Pershing Square Capital Management.

He is a smart guy. No question of that. The Reuters report says he betting on an improbable outcome.

Via Reuters:

• Billionaire money manager Bill Ackman went public last month with his wager that the days of the Hong Kong dollar’s 39-year-old peg to the U.S. dollar are numbered.
• Most fundamental analysts say such bets are foolish, pointing to the city’s still massive reserves and China’s backing.
• But they can be relatively cheap and even profitable regardless of the peg staying intact, and it buys insurance against unlikely but not impossible chains of events, such as a sudden blow-up in China, devaluation or a geopolitical chill.

Kyle Bass bet heavily on the peg breaking back in 2019. For background on how the Hong Kong Monetary Authority defend the peg check out this post:

• The Hong Kong dollar peg has been in place without breaking since 1983. This time its different says Kyle Bass.

(ps. It wasn’t different)

This article was written by Eamonn Sheridan at forexlive.com.