Bill Ackman’s 7 Most Important Trades When He Shorts The Hong Kong Dollar
- Bill Ackman, a multi-billionaire investor, is shorting Hong Kong dollars for his latest trade.
- Boaz Weinstein, a veteran trader, said it’s a smart lottery ticket bet that the currency’s dollar-dollar peg will fall as interest rates rise.
- Here are Ackman’s most significant trades, from making $2.6 billion during the pandemic and to losing his long position in Netflix.
Bill Ackman bets against the Hong Kong dollar’s exchange rate with the greenback in his latest trade.
“We have a large notional short position against the Hong Kong dollar“through the ownership put options,” the billionaire investor wrote last week. “The peg is no longer a good idea for Hong Kong, and it will only be a matter time before it breaks.”
Since nearly forty years, Hong Kong’s currency has been valued at between 7.75- 7.85 US Dollar. But the Federal Reserve’s aggressive interest rates increases this year have put a strain on that peg. Put options are derivative contracts that allow the holder to sell an asset at a predetermined amount on a specific date.
The Federal Reserve rates decisions are matched by Hong Kong’s finance ministry, which maintains the dollar peg. Ackman said that China is facing a zero-COVID-fueled slowdown in its economy and a crisis in its property market, and it’s becoming increasingly difficult to abandon this strategy.
Boaz Weinstein, a veteran trader, praised Ackman for his latest short as a 200 to 1 ‘smart lottery ticket‘ – but others have said that it’s unlikely his big bet against the Hong Kong dollar will pay off.
“I can see Ackman’s point – Hong Kong’s economy is suffering from slow growth at a time when the dollar is surging because of tightening monetary policy,” SEB’s chief emerging markets strategist Per Hammarlund told Insider. “But I don’t believe the peg will break at this point.”
In his 30-year career at the helm of Gotham Partners and then Pershing Square Capital Management, Ackman has racked up some outsized wins – as well as some troubling losses.
Here are seven of the most important trades made by billionaires.
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