FRANCE MAY BE 'MAJOR POTHOLE' IN '14, SAYS HEDGE FUND STAR HINTZE

18/11/2013

Speaking at the Reuters Global Investment Outlook Summit in London, Sir Michael noted that social tensions, government debt, and an exodus of workers were all factors contributing to financial instability in France:

"The real issue will not be the periphery. The real problem would go back to France," said Hintze, whose CQS Directional Opportunities fund rose 36 percent last year and is up 12 percent this year.

"Core Europe is in sensible shape, especially Germany, but what does worry me a little bit is what happens in France, because I think that's one that could be a major pothole in 2014."

Hintze said he has bought credit default swaps (CDS) - insurance against default - against French corporates, and he picked out banks as the most interesting opportunity. The European Union has prohibited the purchase of CDS on sovereign bonds without owning the underlying bond.

"When we've done our stress tests around them (the French banks) they're fine. (But) they're interesting enough for me to play the macro theme," he said.

http://www.reuters.com/article/2013/11/18/us-investment-summit-hintze-idUSBRE9AH0B520131118