Hedge fund manager Kyle Bass has a theory about what could happen to credit growth in Asia over the next couple of years. And he has a trade strategy to match.
The Hayman Capital Management founder and managing partner told CNBC's "Power Lunch" on Friday that Chinese banks have grown too large compared to the country's GDP. He said a natural result of this would be a loan-loss cycle. "And if that's the fact, then credit fueled growth in Asia is going to take a breather and have a little bit of a decline," he said.
"There are a lot of institutions in Asia that lend aggressively to China," he said. "I think the Asian banks are going to see severe trouble over the next two years." But, he added, "it's not the end of the world."