Hedge fund managers see echo of past crashes in markets

BEIJING: BYD Co is building what would become the world’s largest vehicle-battery factory next year in an effort by the Chinese electric-car maker to increase capacity and help revive earnings growth.

The plant will have an annual capacity of 24 GWH when it is fully in use in 2019, enough to equip 1.2 million BYD Tang electric cars, according to the manufacturer backed by Warren Buffett. Covering 1 million square meters -- equivalent to about 140 soccer fields -- the factory unveiled Wednesday will help meet BYD’s plan to boost its battery-making capability almost fourfold to 60 GWh by 2020.

“We have reason to believe there will be further explosive development in the new-energy vehicle industry,” BYD Chairman Wang Chuanfu said at the facility in the Chinese outpost of Qinghai. “There is huge potential in the lithium industry.”

China’s biggest manufacturer of new-energy vehicles has differentiated itself from other carmakers with its self-sufficiency in battery supplies and strength in battery-production, starting with its roots as a maker of mobilephone batteries. BYD is also expanding production to sell batteries to other automakers to broaden its income sources after posting profit declines in five of the past 10 years, and plans to spin off the business.

The new factory, which Wang called the world’s largest power-battery factory, will be a fully automated facility, with about 100 robots handling logistics and manufacturing.

BYD will face competition for the crown. Tesla Inc is expanding its gigafactory in Nevada to reach output of 35 GWh, according to its website. The company headed by Elon Musk also

China.

Rising ownership of electric-powered vehicles in China, where the government has thrown its weight behind the industry’s growth, has spurred the expansion of battery makers such as BYD and Contemporary Amperex Technology Co, whose rapid production ramp-up turned it into the nation’s biggest maker of battery cells for electric cars.

Like BYD, the company known as CATL is also building a 24-GWh factory. That’s scheduled for completion around 2020 and help CATL expand its production capacity to 88 GWh by that time.

The Chinese government is trying to consolidate the auto industry and establish a few world leaders among automakers and component suppliers. Regulators are also urging automakers to install batteries with higher energy density and longer range. — Bloomberg LONDON: The ranks of hedge fund managers expecting impending market chaos are growing.

Greg Coffey, the former star manager at Moore Capital Management who started trading at his own firm this year, is comparing the turmoil in May to the end of dotcom bubble in 2000. Horseman Capital Management’s Russell Clark, one of the most bearish hedge fund managers in Europe, invoked memories of the financial crisis of 2008 in a letter to clients.

The two managers, among the best-known in Europe, join a growing chorus of investors predicting an end to the decade-old rally in asset prices, as central banks move to normalise policies and the rise of populism threatens trade across the globe. Billionaire George Soros in May warned of a looming financial crisis and an existential threat to the European Union. Crispin Odey has for years expected a market crash and lost money betting on it.

“The ghosts of 2000 are upon us,” Coffey wrote in a May investors letter for his Kirkoswald Capital Partners. “Make no mistake, this is the current investment environment we are in, and will be through 2018.”

Betting on a crash – one of the key abilities hedge funds have over traditional investment funds – has been a painful strategy for years as central banks across the globe bought assets to prop up markets. Odey’s European Inc hedge fund lost almost 50% in 2016 and a further 22% last year.

“Since the global financial crisis, the number of doomsayers has risen exponentially,” said Philippe Ferreira, a Paris-based senior cross-asset strategist at Lyxor Asset

� Management, which oversees about 73bil in so-called alternative and active strategies. “But aside from political risks, the global economy is doing well.”

Still, there’s some evidence that the market calm of past years may be ending. Trillions of dollars were erased from global stocks in early February when a sudden surge in volatility surprised investors who were betting that central-bank money printing would keep markets calm. The wild ride resumed in May when political turmoil in Italy sparked a selloff, and continued into this month amid trade stress between the world’s biggest economic powers. — Bloomberg