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GBP arbitrage: VUSA to GSPX; HSI to China MSCI (GBX)

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  1. #1

    Join Date
    Aug 2019
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    GBP arbitrage: VUSA to GSPX; HSI to China MSCI (GBX)

    Thinking of arbitraging the GBP as my guess is it can't go much lower:

    Have a decent chunk in VUSA which I was thinking of selling and buying equal amounts in GSPX (GBP hedged S&P500) to crystallize the difference between USD and GBP at this point.

    Thinking of doing something similar and selling my HKD 2800.hk and buying same amount in a GBP denominated MSCI China fund (which has performed similar to 2800.hk.

    Thoughts? Or am I playing with fire?


  2. #2

    Join Date
    Oct 2006
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    Why do you think GBP can't go lower?

    aw451 likes this.

  3. #3

    Join Date
    Feb 2019
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    When I hear retail telling me GBP can't go any lower, it's a definite sign to sell cable


  4. #4

    Join Date
    Oct 2010
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    23,394

    It's generally pointless to indulge in currency speculation - you have a 50/50 shot at being right - more fun to roll some dice in Macau.

    shri and aw451 like this.

  5. #5

    Join Date
    May 2021
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    713

    Keeping exchange rate crystal ball aside, its an interesting idea at least theoratically, obviously hedged ETFs are best suited for such high currency fluctuations time and it protects you both ways so if you are willing to forego opportunity cost of further depreciation in GBP, not a bad idea..


  6. #6

    Join Date
    Jul 2008
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    It can certainly go lower, but (I think) it's almost certain to return back to somewhere nearer to 10.5HKD to the pound or so. Just a case of when (I think).


  7. #7

    Join Date
    Aug 2019
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    As of today it has just dropped even more. I know I can't get it right exactly, but I don't believe the BoE will allow a huge amount more depreciation against USD. Who knows! Maybe GBP1:HKD8.83 is the new norm!

    Edited for typos.


  8. #8

    Join Date
    Jul 2008
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    So much of my cash is now in GBP that my balance has been steadily declining. Rather disconcerting.


  9. #9

    Join Date
    Aug 2019
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    Holy moly 8.67 now!

    shri likes this.

  10. #10

    Join Date
    Feb 2019
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    Quote Originally Posted by Javatar:
    As of today it has just dropped even more. I know I can't get it right exactly, but I don't believe the BoE will allow a huge amount more depreciation against USD. Who knows! Maybe GBP1:HKD8.83 is the new norm!

    Edited for typos.
    The only better leading indicator than retail opinions, is the opinion of the bank of England that sterling MUST NOT go any lower.

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