Last month, Bill Gross took to Twitter and recommended shorting the Shenzhen Composite Index, which, at the time, was just a little over a hundred points off its peak. One month and 1,300 points down later, it turns out he actually didn’t do the trade, according to Bloomberg:
“The Shenzhen Composite Index has fallen 38 percent since the famed Janus Capital Group Inc. money manager recommended shorting it last month. Gross chose instead to wager against both the Standard & Poor’s 500 Index and emerging market currencies that would be affected by falling stocks in China. Those trades have worked, he said.”
This is hilarious, not because this is the second time he turned a ridiculously prescient call into a missed opportunity – though that has caused a smirk or two – but because he was actually mentioned as a possible instigator of China’s equity rout.
Here’s what Taiwan-based China Daily News had to say about him:
“According to the analyst, massive funds entered the futures market, building a short position and leading to declines in the stock markets. The size of the funds and the sophisticated trading methods are beyond the ability of Chinese institutional investors, the analyst said.
In fact, Bill Gross of Janus Capital, a co-founder of global investment firm PIMCO, said in early June that the Shenzhen Stock Exchange’s Component Index presented perfect short-selling opportunities.
At the time, the index was at a seven-year high but plummeted 30% on Gross’s comments. Morgan Stanley and Credit Suisse have also been bearish on Chinese shares recently.”
Going back to the trade, Gross apparently planned to short the Deutsche X-trackers Harvest CSI 300 China A-Shares ETF, which at the time of his Tweet, traded at around $53. He chose not to however, explaining that “I was trying to stick to my knitting, and China wasn’t really my knitting.” It has since fallen 36%.
He does own some Credit Default Swaps on China, so it’s not like he missed it altogether. However, he’s not particularly happy that he missed the meat of the selloff, telling Bloomberg:
‘‘Woulda coulda shoulda… …Obviously I wish I’d shorted a bunch of shares but that’s the bane of the portfolio manager: never happy.”
Well, at least he didn’t plan to go long and execute it the right way.