Bill Gross Reveals How Traders Should Play The Decline In The Chinese Stock Market

On 3rd June, 'Bond King' and Portfolio Manager of Janus Capital Group Inc JNS's Janus Global Unconstrained Bond Fund, Bill Gross, had tweeted: ' Gross: German Bund "Short of a lifetime" update - it's happening. Up next - China Shenzhen index. Not just yet ...'

With a nearly 30 percent fall in the Shanghai Composite Index in the last few weeks, it seems Gross' predictions have come true.
Gross was on CNBC Wednesday to reveal if he acted on his own prediction and the way a trader should play the decline in the Chinese stock markets.

Take Advantage Of Increasing Risk Atmosphere

"The Chinese market is a difficult one to play," Gross began. "And I talked about the Chinese market being a great short and the second trade of a lifetime. And in fact, I think, it has despite the manipulation of the Chinese authorities over the past several weeks and several months."

Not Necessary To Short The Chinese Stock Market

He continued, "But what you do if a market like that is declining and if it generates volatility in other markets and other risk markets is that you basically move in currency markets, you move against high yield markets that is you don't own them or you short them. And you take advantage of the increasing risk atmosphere that a declining Chinese stock market portrays."

"So, it's not necessary to short the Chinese stock market and matter of fact it's very dangerous. What you do is you look outside the Chinese economy and you move in those particular areas"

The Fund Is Doing Well

Gross also remarked that the unconstrained fund is "doing really well" and "the inflows are coming, believe me."