Hendry is not, however, the only one: Jim Chanos, founder of Kynikos Associates, has been warning about China’s excessive credit and potential housing market disruption infecting the broader economy, backing up his comments by shorting construction (including Hong Kong-listed Chinese property firms) and industrial companies operating on the mainland. Hendry has been developing the CDS portfolio since opening a new fund back in June after investors showed interest. Currently, the fund owns CDS on 20-30 corporate bonds, most of which are Japanese. Hendry told the FT: “I could go to China and short equities, but that’s too volatile and I have unlimited loss. I could short commodities like copper, but that would be unlimited loss too, so I don’t like it. I could look for ways to be short Australia or Brazil, but there’s not enough optionality there. Japan is the most exposed economy industrially. If there is the slightest sneeze in south-east Asia it will give me so much more bang for my buck.”Hendry, who is paying as little as 50 basis points (0.5 per cent) annually on companies such as Nippon Steel, hopes to see the trades pay off within 18 months.