Top Hedge Fund Says Japanese Banking Crisis Could ‘Blindside' The Global Market
Shannon McConaghy, portfolio manager at multi-billion dollar hedge fund Horseman Capital, is betting big that the collapse of Japan’s banking industry will “blindside the market.”
McConaghy runs Horseman’s Japan-focused fund, which is up 17.06% year-to-date after shorting Japanese equities, with the largest short being Japan’s regional banks.
The bearish fund manager says that Japan’s shrinking mortgage market, its monetary policy and a huge total of hidden non-performing loans make up a ticking time bomb in the land of the rising sun—one set to explode as Baby Boomers turn 70, Business Insider reports.
The aftershock will be felt globally, according to McConaghy, who adds that the current market fragility means a Japanese crisis could cause "sustained risk-off in global markets," meaning riskier investments (especially highly-leveraged loans) fall, while safer ones rally. [BI]
