Capital Flight From Hong Kong (w/ Kyle Bass)

Capital Flight From Hong Kong (w/ Kyle Bass)



KYLE BASS: It's probably going to be a political situation. I don't care. I'd rather own US dollars tomorrow. I have friends that are some of the biggest art dealers in
the world and they do these Art Basel shows, right. And there's an
Art Basel in Miami. There's an Art Basel in Hong Kong. And so, in the last couple of years, this year in
particular, my friend that sells all the fancy paintings, not one
Chinese buyer this year, not one. And three years ago, they were selling them like hotcakes
to the Chinese. So, they can't get their money out. And they're policing
that very, very, very, very closely. RAOUL PAL: But my guess is they can put the money, as you
said earlier, into Hong Kong, right? So, their first step was put into Hong Kong real estate,
right? You're outside of China, because within China, then you're
free. You liquidate the property or whatever you do- KYLE BASS: And in theory, there's a rule of law on Hong
Kong, right? It's still a UK rule of law in theory. RAOUL PAL: In theory, exactly. Which we'll come a little
bit on to in a sec. But I just have a feeling that that money is flowing out.
So, let's say they sell real estates. It's mainland money that's been there for 10 years. It now finds its way out because they're looking for more
security. So, it goes to Vancouver, it goes to Sydney or wherever. KYLE BASS: Imagine if you're a Hong Kong family that has
been there for generations. And let's say you've built wealth over time. You would
have to be foolish. And in a freely convertible market, you'd have to be
foolish to leave at Hong Kong dollars given the macro economic instability of Hong Kong. And
what happens in a peg where 36 years, there's no volatility, right, no volatility begets no
volatility until it doesn't. But if you look at the macro, if you had your entire
wealth invested in Hong Kong dollars, in Hong Kong stocks and bonds, and I sat and talk with you
and explain to you how bad the macro is, and then you say, well, it's probably going to be a
political situation. I don't care. I'd rather own US dollars tomorrow, and not be on the hook
or at risk of my home currency collapsing. RAOUL PAL: So, let's talk a little bit about risk in terms
of the risk to the people in Hong Kong. Because we talked about autonomy, we both sniggered about
autonomy in Hong Kong because it feels like and from friends of mine in Hong Kong as well and you've
got friends in Hong Kong- that autonomy is going fast. KYLE BASS: So, last night, I had dinner with a friend that
just sold both pieces of real estate that he had there and he moved his family to London. RAOUL PAL: Oh, really? KYLE BASS: Gone. He grew up in Hong Kong, generational
Hong Kong family, the moment that China started actually floating a proposal
to be able to extrajudicially grab someone off the streets of Hong Kong and take them to China without
any court proceeding, that's scaring the Hong Kong- not only the Hong Kong elite, but 85,000 Americans that
live there, right? In the past, we all know that the MSS from China grabbed
booksellers that were writing books about President Xi that he didn't
like, and they came in the middle of the night, took him and ripped them back to China. That was a
political grabbing. And everyone was up in arms about it. And there were four booksellers that went missing for a
while, and then they resurfaced at some point in the future,
never to sell another one of those books again. This is a different thing. The proposal in the manner in
which it is stated today, and Carrie Lamb's government is the one making this
proposal. So, she's not really democratically elected, right? She's
chosen by President Xi to be the CEO of Hong Kong and she's proposing this, and her proposal is it states
that there'll be a judicial review, i.e. if the crime that is supposedly been committed by the
"fugitive" is a crime also in Hong Kong. So, let's choose murder, right? It's a crime in both
places. If China calls the police station in Hong Kong, and says
Raoul committed a murder in China, arrest him and send him over here. The court says their
judicial review is okay, is murder a crime here? Oh, yes, it's a crime here, we've got- the presumption is
guilt. So, there is no court process to determine whether or not this is a political movement or not or
whether or not you actually committed a murder. RAOUL PAL: So, how can people like Li Ka-shing remain
within Hong Kong? KYLE BASS: I think they have to leave. I think it's a real
problem. My friends that are very well-off are leaving. Now, if you
remember Nancy Pelosi just had a group of 10 delegates from Hong Kong here to the States two
weeks ago. And was very forceful with some language and said, there
are 85,000 Americans that live in Hong Kong. And we are very concerned about the new proposals that are
being floated in the legislature in Hong Kong. If this becomes law, more importantly, this goes back to
this word autonomy. The Brit's agreement with Hong Kong and the US' agreement
with Hong Kong, for instance, the 1992 US-Hong Kong Policy Act is re-ratified annually. The State Department submits report to the President and
then it's up to the President to either take the State Department's recommendations or
do whatever he wants to do. If he determines that they are no longer sufficiently
autonomous, we can treat Hong Kong as China. Well, that changes the entire complexion of Hong Kong's
economy, meaning all of a sudden, all the tariffs, all the restrictions, all the rules of trade that we
engage with China on, we start treating Hong Kong that way. Today, Hong Kong is
treated as its own sovereign. There are no tariffs, it's free trade, unabated free
trade. And as long as, again, they maintain that autonomy, we
honor that agreement. If this law goes through, it is a clear violation of our
policy act and it's a clear violation of the Brit's agreement with
Hong Kong. That in itself will force- remember in 1995, during the
Tequila Crisis, what happened? What precipitated the Mexican decline? What precipitated
Thailand in '97? It's always one thing. It's always the wealthy lose faith or fear the government
and they start moving their assets out. RAOUL PAL: Yeah. I was thinking too. It was the same. KYLE BASS: That's what happens. So, if the wealthy in Hong
Kong either convert to dollars or start leaving, which I think both will happen, then Hong Kong is
finished. RAOUL PAL: So, what do you think? How does this play out? So, we've seen the HKMA is running low on the accessories.
The currency is staples to the limit, so they haven't intervened almost every day. The US dollar
as of today looks like it's breaking high and it's going to get stronger, which will only put more
pressure on this situation. How does it play out? What's going to happen in this? KYLE BASS: I really don't know. All I know is the pressure
that is being applied is not a- this is not anomalous, it's not a one-off, it's not
they're just caught up in the in the tide of people moving to dollars everywhere and in Hong Kong, it's not of
its own problems. You're talking about the most levered developed economy in
the world with the most levered consumers in the world with the most expensive real estate in the
world, all of a sudden, having a real problem.

34 thoughts on “Capital Flight From Hong Kong (w/ Kyle Bass)

  1. I your video from my youtube channel, Hong Kong people are sending their money out from Hong Kong.

  2. wow..a real scare mongerer, join the band wagon. heard exact same about japan in the 90s… scare theme.. 2015 isis, 2016 north korea… last year was AI is going to take over the world, this year its china is the existential threat to everyone and what for reason? its like the inability to disprove these threats make them sound real.

    China hasn't bothered anyone for 30 years and lost every war for centuries and just wants a few barren rocks 50km off the coast line while trump has aircraft carriers and drones zigzagging all over the globe. thought its just me but the new popular book 'Sapiens: A Brief History of Humankind' explains why empires need enemies really well.

  3. Why do people insist on calling Xi Jinping President Xi? China is currently living through the time of the Xi Dynasty and Xi Jinping should be referred to as Emperor Xi

  4. This Yank money changer with a history of subpar investment performance should be worrying about U.K., Europe, and US debt crisis. HK, Singapore, and China will be doing just fine.

  5. well if its so scary about the new law, then leave hong kong. does it look like anyone is gonna cry a tear?

    imagine if u commit a crime in New york and then flee to seattle and new york police cant get u extradited and seattle wunt arrest u.

    what rubbish.

    butbutbut china so scary. funny enough canada and usa did exactly the same thing what they are accusing china of doing.

    Ms Meng is kidnapped by thugs when she has done nottin in Canada. the canadians acted on behalf of there usa masters.

    pure thug and gangsta mentality.

  6. nobody cares about kyle bas whose track record was a lucky 2008 shot and then notting…

    even a broken clock is right twice a day.

  7. One country two systems is a lie. Read my letters to editor in Financial Times. This city is dying. Not just money, some middle class families are emigrating too.

  8. I will not own any foreign stocks until President Trump is done rearranging world trade.The EU and India are next on his agenda.Sit back and watch it accelerate MAGA

  9. Eventually the rich lose faith and become fearful of all governments and there are no safe havens to retreat (run away) to.

  10. This wanker has some serious prejudice against Asian markets for some reason. He's like short Japanese bonds, short Chinese Yuan and now somehow speaking against Hongkong. Last time I checked he fund had not been making good returns after 2007, so I don't know where his credit come from.
    I mean, just as an example, Peter Schiff also made some good predictions during the subprime crisis, he pretty much has the opposite point of view to this guy on Asia.

  11. Loads of craps. What about Shanghai or Shenzhen which is under 1 country 1 system ,100% mainland China? Yes if HK 1 is finished, it will become HK 2 and only be growing better under 1 country 1 system without the dirty hand of the West.. Don't you see you guys flock into Shanghai over the years despite it is 100% China anyway? And the HK dollars, ok the RMB is actually stronger than HKD. So assuming HK becomes part of China tomorrow, she would use RMB which is 13% stronger.

  12. Raoul looks scared senseless in this. He looks like he's thinking, "if I play this right, I could make tons of money…but we're one step closer to WW3."

  13. I like Kyle's talk, but there's been talk of a China collapse going-on for a decade now. Don't see it happening

  14. Size of china vs size of hong kong. . Ok hong kong citizens sell and leave and millions of new ultra wealthy mainland chinese come and pick up all the real estate and land. Wheres chinas problem?
    Hong kong is dead. Long live hong kong.

  15. The Chinese are buying Bitcoin to get their money out of China! Massive buying by Chinese of late driving Bitcoin higher…there is no better way to expat money than Bitcoin!

  16. KYLE BASS is a propaganda bull shit talker who predicted half true half lie info. Listen to him for investment strategy will surely lose money.

  17. 为什么不持黄金 为什么要持美元 我宁愿相信实物 都是纸和数字点 世界这么乱 何止中国和香港哇 源头恐怕都在美联储

  18. I wish realvision was more affordable, they probably target high wealth individuals with their subscription price but as an ordinary I just can't afford it sadly, but these excerpts are appreciated, thanks.

  19. Its just a speculation based on simplistic views. In reality there are many variables and possibilities. And in the worst case, HK will just slowly become one of China's major cities, like GZ, Shanghai. There may be a crisis depending how china and US play the game, but if that happens that may mean opportunities. Nice try, but it will not sink overnight. This is still not the right time for a war.

  20. who was caught in hongkong on the street by local police or someone and send back to mainland. ? for what reason?

  21. HK people forgot that this territory was and is a part of China. The party is over, you have enjoyed enough privileges and benefits. 💪🇨🇳

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