Kyle Bass: «Hong Kong Property in Free Fall»

Kyle Bass, Hayman Capital Management

Kyle Bass, Hayman Capital Management

The hedge fund manager who gained notoriety when he wagered against U.S. subprime mortgages prior to the housing crash, is now forecasting a real estate collapse in Hong Kong.

Speaking from Las Vegas, the gambling centre eclipsed by Asia's Macau, at a hedge fund conference, Bass is said to have commented that Hong Kong is in a worse position than it was prior to the 1997 Asian Financial Crisis.

Falling not Plunging

According to data from Hong Kong real estate agency Centaline, house prices in Hong Kong have sunk approximately 13 percent from a peak in September 2015. The jury is out if this represents a free fall.

Goldman Sachs property analyst Justin Kwok said in a research note earlier this month that Hong Kong real estate prices, a key to the wealth of the majority of Hong Kong people, would drop by up to 20 percent this year. His basis for the fall, according to a Bloomberg article, was based on rising interest rates which may or may not come to fruition.

Ulterior Motives

Bass said last week at a conference that investors putting money in Asia should ask themselves if they can handle 30 percent to 40 percent write-downs in Chinese investments.

Bass is also predicting losses for China's banks which is hardly a uniquely intellectual call. However, his outspoken opinions on the Hong Kong property market and the Chinese financial system come at a time when he is said to be raising money to start a dedicated fund for bets in the worlds second largest economy.

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