At Least One Industry is Doing Well From Sterling's Weakness

Generali

http://www.ft.com/cms/s/0/94e1a24c-3917-11df-8970-00144feabdc0.html

UK hedge funds gain from bets on sterling



Some of the UK’s biggest hedge funds have made hundreds of millions of pounds by betting on a decline in the value of sterling this year in trades that suggest rising expectations of further falls over the next few months.


Flagship funds of Man Group, Winton Capital and BlueCrest have profited from big positions speculating on the drop in sterling, which has come under pressure over worries over the UK national debt, electoral uncertainty and the sluggish state of the economy.

Kohoutek

Don't worry, Gordon's being working hard to protect that industry from any reform or regulation so they can carry out their laudable goals such as betting on the demise of the UK's currency.

http://www.ft.com/cms/s/0/73f3149c-30ea-11df-b057-00144feabdc0,s01=1.html

London’s hedge fund and private equity industry won a last-minute reprieve from contentious new European regulations on Tuesday, after Gordon Brown pleaded that the issue be shelved until after the general election.

The personal intervention by the prime minister staved off certain defeat for Britain at a finance ministers’ meeting in Brussels, where France leads a powerful coalition that is calling for tough regulation of the sector.

Gordon Brown - tireless protector and champion of the poor and downtrodden, and, er, the super-rich.

mbga9pgf

I wonder if it will offset all the extra cash the UK bailed banks will have to find to pay for bad US and eurozone debt writedowns?

CLAPTON

presumably the hedge funds are offering to sell stirling at a low price at some time in the future ... say two weeks time at a price lower than it is today.

presumably some other company is willing buy sterling at that low price in two weeks time

in the event after two weeks if sterling hasn't declined to that low level the hedge funds lose money because they have to buy at the then rate to meet their commitment to the buyer
on the other hand if sterling drops even further then they make a profit as they can meet their commitment to supply streling more cheaply that their committed buyer has to pay.


why is that fundamental wrong?

amcluesent

Shorting everything about Britain was 100% obvious since the mentally unbalanced Clown took the helm.

tartanterra

CLAPTON wrote: »

.....presumably the hedge funds are offering to sell stirling at a low price.....

I don't think the people of Stirling will be pleased to find out that hedge fund managers have devalued their town....:D

tomterm8

CLAPTON wrote: »

why is that fundamental wrong?

It's not. But, it's like where Twoflower sells insurance to the denizens of Ankh Morpork: if you can buy a product where in exchange for 5 cents you can make 10 gold dollars from burning down someone elses shed , then sooner or later the shed is going to be burnt down. And, if you do enough of this kind of thing it tends to set the city on fire.

disclaimer: this post has been dumbed down because I am practicing writing in case I ever get a chance at the Daily Mail.

sabretoothtigger

Kohoutek wrote: »

Don't worry, Gordon's being working hard to protect that industry from any reform or regulation so they can carry out their laudable goals such as betting on the demise of the UK's currency.

http://www.ft.com/cms/s/0/73f3149c-30ea-11df-b057-00144feabdc0,s01=1.html

London’s hedge fund and private equity industry won a last-minute reprieve from contentious new European regulations on Tuesday, after Gordon Brown pleaded that the issue be shelved until after the general election.

The personal intervention by the prime minister staved off certain defeat for Britain at a finance ministers’ meeting in Brussels, where France leads a powerful coalition that is calling for tough regulation of the sector.

Gordon Brown - tireless protector and champion of the poor and downtrodden, and, er, the super-rich.

Betting on a horse doesnt make it more likely to win and I dont speed someones death by buying a life insurance policy on them


Why would this be much different. There is no hedge fund able to counteract the 2 trillion of uk gdp and the balance of trade it does internationally so they cannot influence currency long term.

Even when soros broke the bank he didnt turn the tide single-handedly he just looked up the tide table and bet at the right time.

If our own government has the sense to pay attention to the obvious we'd be better off. Instead we have Canute's courtiers heralding the wisdom of market regulation as a solution