Problems that China is Likely to Face With the Drop of the Yuan

Betting against the Yuan has gone back to its former position just as at the beginning of the year. China’s attempt to flood domestic markets with cash while starving offshore markets is being seen as a shortcoming. The Yuan loans offered by the Hong Kong Inter bank have fallen to 4.87 percent, which is 59 points lower than the evaluation undertaken in December. Chris Morrison of Omni Partners hedge fund stated that the funds will flow offshore and will offer a pool of Yuan that will be borrowed or sold if China does not impose capital control policies.

According to predictions, this year, the Yuan might fall by 15 percent and this will make it difficult for China to put a wedge between the onshore and offshore interests. The borrowing costs of the Yuan in Hong Kong have surged across all tenors. This in turn has drained market supplies and added the expense of borrowing for short trades and selling borrowed assets. The Yuan Hibor, which is a benchmark used in pricing loans in currencies outside China, was brought by the Hong Kong Treasury Markets Association in 2013. This information was originally reported on Bloomberg.

Highland Capital management is an investment firm based in Dallas Texas. The firm was established in 1993. The securities Exchange commission has registered the firm to undertake its objectives. Currently, the firm has about $21 billion worth of assets under its management. The firm focuses on Collateralized loan obligations, private equity, hedge funds and long term and short term funds. The firm also invests in natural resources, emerging markets as well as long and short equities. Owing to demand for its products and services, the company has established offices in different parts of the globe. The firm has additional offices in Sao Paulo, Seoul, New York and Singapore.

James Dondero is the co-founder and current president of Highland Capital Management. He is also a certified financial analyst and a certified management accountant. Jim graduated from the University of Virginia with a Beta Gamma Sigma. In the university, Jim pursued a degree in finance and accounting. He started his career at the Morgan Guaranty training program in 1984 as an analyst. Watch Jim and his team ring the NYSE Closing Bell below.

In 1985, the American Express hired him as a corporate bond analyst. Later, he became a portfolio manager. In 1989, Jim moved to Protective Life, which is the subsidiary of GIC. At Protective life, he served as a chief investment officer. Jim has more than 30 years experience in credit and equity markets. His expansive experience in varying investment markets and leading companies has seen him serve as a board member of MGM studios and American Banknote. Mr. Dondero is the chairman of CCS Medical, Cornerstone Healthcare and Nexbank.

Reference
http://www.bloomberg.com/news/articles/2016-01-31/pboc-effort-to-squeeze-bets-against-yuan-undermined-by-stimulus

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