Ackman Makes Major Currency Bet
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After weeks of speculation, hedge fund manager William Ackman of Pershing Square Capital revealed his latest trade Wednesday. Ackman said he is betting Chinese regulators drop the long-held peg of the Hong Kong dollar to the U.S. dollar and seeks to profit from that move.
Speaking at CNBC’s Institutional Investor Delivering Alpha conference, the hedge fund manager said he believes Hong Kong will allow its currency to appreciate by 30 percent against the U.S. dollar.
The Asian nation has kept it's peg versus the dollar since 1983. This link has caused it to weaken this year against other Asian currencies, which has resulted in rising inflation.
"It's a small trade, but if it's successful, it will be our most profitable," Ackman stated. He said even a small appreciate of the Hong Kong dollar from its current value of 7.8 to 1 would make the trade profitable.
Sooner rather than later he believes Hong Kong will bow to pressure and revalue the currency.
"Based on how Hong Kong historically has responded to similar economic circumstances we believe they will move the peg soon," Ackman said.
Speaking at CNBC’s Institutional Investor Delivering Alpha conference, the hedge fund manager said he believes Hong Kong will allow its currency to appreciate by 30 percent against the U.S. dollar.
The Asian nation has kept it's peg versus the dollar since 1983. This link has caused it to weaken this year against other Asian currencies, which has resulted in rising inflation.
"It's a small trade, but if it's successful, it will be our most profitable," Ackman stated. He said even a small appreciate of the Hong Kong dollar from its current value of 7.8 to 1 would make the trade profitable.
Sooner rather than later he believes Hong Kong will bow to pressure and revalue the currency.
"Based on how Hong Kong historically has responded to similar economic circumstances we believe they will move the peg soon," Ackman said.
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