Wall Street Photo: AFP

Kyle Bass' disastrous Hong Kong short sale, backed by China bashers, is another example of how ill-intended short-selling operations against China are doomed to fail and a wake-up call for anti-China forces that seek to profit from stirring panic, Chinese experts said on Thursday.

A recent case at the US Securities and Exchange Commission (SEC) revealed that Bass' bet against the Hong Kong dollar last June, with funds raised by anti-China hawk and adviser to former US President Donald Trump, Steve Bannon, lost heavily.

An enforcement action by the SEC against GTV Media Group, which has ties to Bannon, revealed that the group raised $339 million through an unregistered share sale and transferred $100 million from the proceeds to a hedge fund managed by Bass's Hayman Capital Management last June, Bloomberg reported.

The fund, which made a 200 times leveraged bet against the Hong Kong dollar, ended up losing 95 percent of the $30 million it invested, according to media reports.

It promised investors a return of 6,400 percent should the Hong Kong dollar fall 40 percent against the US dollar, but that did not happen.

The Hong Kong dollar has slipped just 0.4 percent, trading well within the band against the US dollar over the past 18 months, the Bloomberg reported.

The failed attempt to undermine Hong Kong's financial system came at a time when the financial hub was hit hard by riots, but its failure shows that anti-China hawks' bet on China's instability, which was full of subjective political nonsense, is doomed to fail, experts said.

Using economic and financial means to interfere with China's sovereignty is the conventional practice of unilateralism and hegemony aimed at destabilizing and weakening China's economy, Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Thursday.

Bass is among a group of notorious China bashers who have constantly attempted to spread panic about the Chinese market and profit from it.

During the 1997-98 Asian financial crisis, billionaire investor George Soros aimed to sell the Hong Kong market short, with attacks that resulted in volatility in Hong Kong's stock and foreign currency markets. With strong backing from the central government, the Hong Kong Special Administrative Region government not only successfully beat back such attempts and emerged as a stronger global financial hub.

Such bets against the Chinese economy are also frequent in history, though many of them are disguised as market behavior, Dong said, adding that Goldman Sachs and UBS both have histories of going short on China.

With the uncertainty brought by the COVID-19 and the question of how China-US relations will evolve, similar attempts to short the Chinese market will become more frequent, experts said.

"With an improved financial supervisory system and timely monitoring of and intervention in abnormal capital flows, there should be a sufficient toolbox to prevent such risks," Dong said.