A Hong Kong Macro Play

Published on
October 3rd, 2019
20 minutes

A Hong Kong Macro Play

Trade Ideas ·
Featuring Kevin Smith

Published on: October 3rd, 2019 • Duration: 20 minutes

Is the 36-year-old currency peg between Hong Kong and the U.S. on the verge of collapse? Kevin Smith, CFA, founder and CIO of Crescat Capital, explains his short thesis on the Chinese Yuan and Hong Kong Dollar. In this interview with Justine Underhill, Smith reviews the debt buildup and imbalances in both places and highlights put options as a way to play the situation. He also updates viewers on his outlook for the S&P 500 and gold. Filmed on October 2, 2019.



  • EQ
    Eduardo Q.
    21 November 2019 @ 18:36
    It seems like this guy studied deeply the Interview of Kyle on HKD... Aggregate balance hasn´t decreased since April-May... and Carry has become negative... I haven´t traded options on currencies so I don´t know if adding timing risk to this trade offsets the negative carry of simply buying USDHKD with CFD´s or Cash... I think his timing for the puts on HKD is very short (1-6 months) IMHO I think the easiest way to trade this one is buying USDHKD once the carry turns again positive. The risk is tiny and there´s no timing risk. Regarding increased economical distress and current protests, they haven´t done much in terms of threatening the peg. And Yes, nice to see Justine again... she´s the reason why I pay my subscription... :-)
  • TS
    Tom S.
    25 October 2019 @ 02:06
    I like Kevin. He strikes me as an honest bloke with genuine convictions.
  • NA
    N A.
    10 October 2019 @ 02:12
    I’m sorry but “anti communist protests in China” and “the banks have all broken down”. Please go smoke your dope somewhere else. *massivefacepalm Can’t even watch the rest of this...
  • PB
    Pieter B.
    6 October 2019 @ 06:17
    Great conversation! Thanks a lot!
  • NL
    Nicholas L.
    5 October 2019 @ 11:53
    Always interesting to hear Kevin as he is so detailed in his responses / trade ideas, and Justine is a great interviewer - more from these two please!
  • MC
    Matt C.
    4 October 2019 @ 16:14
    love this guy.
  • bs
    bernard s.
    3 October 2019 @ 09:09
    You should have Kevin smith vs Louis Gave do a discussion. Re USDCNY. Thank you
    • AM
      Andrew M.
      3 October 2019 @ 10:48
      Not really. Gave is ridiculously biased given so much of his business relies on HK / China. Should have John Greenwood, who helped design the peg, on to refute Smith/Bass etc. His views on us being 'mid cycle' bc of the lack of bad debt or inflation are also interesting. https://s3.eu-west-2.amazonaws.com/assets.invescohub.com/invesco-eu/64683+Hong+Kong+Dollar_article.pdf
    • DR
      David R.
      3 October 2019 @ 17:50
      Not quite exactly. Louis Gave's views are nuanced and change as the facts do. But of course he is wrong sometimes and will be biased based towards his beliefs.. But he had something else out this week for their institutional and family office clients. He does not directly deal with retail. The firm is international and they manage many UHNW clients ($10-million minimum investment) in US via his namesake firm Evergreen Gavekal, which seems to provide stellar service and money mgmt from my perspective. Tho I may have investments, I'm otherwise not at all associated with him as do not work for him or any of their firms in any way, so this isn't a plug or advert.
    • LH
      Lik H.
      3 October 2019 @ 23:56
      You can look at ishares MSCI HK ETF, but my view is HK future contract will be a better way to do long short, it has main and mini contract. Also, HKD is pegged to USD, so currency risk is minimized.
    • DS
      Daniel S.
      4 October 2019 @ 14:56
      What future contract are you referring to?
  • KE
    Kathryn E.
    4 October 2019 @ 09:24
    Good to see Justine back. Also, is it only me who gets annoyed with Alex's game clip on each video? That is coming from someone already invested in the service
    • MM
      M. M.
      4 October 2019 @ 11:11
      Didn't you pay off your house yet Kathryn? :-
  • RS
    Ryan S.
    3 October 2019 @ 13:06
    Does anyone know which ETF Kevin is buying puts on to short the Hong Kong Dollar? I don’t know of any Hong Kong Dollar etfs. Thanks.
    • LW
      Luke W.
      3 October 2019 @ 15:44
      I spent some time looking for a vehicle after that Kyle Bass interview (I've never seriously traded currencies before, so I wanted something with a convenient packaging). I couldn't find one. If anyone knows if an inverse HKD ETF, please reply with the name! I didn't specifically look for a short Yuan etf, but that may exist.
    • DS
      Daniel S.
      3 October 2019 @ 18:05
      Maybe EWH? Not sure. Trying to figure out which options they're using myself...
    • mb
      michael b.
      4 October 2019 @ 02:19
      I added currency trading to my TD Ameritrade account. That is their ThinkOrSwim platform. There you can open a position on USD/HKD. Super easy. You can call their desk and they’ll walk you through it. It was my first currency market trade and they covered all my questions. After decades of staying in a tight range, no ETF provider in their right mind would go to the trouble of creating one, so don’t bother looking. Best of luck.