Hedge Fund Manager Odey Says U.K. Stocks Could Plummet 80%

(Bloomberg) -- Crispin Odey, whose main hedge fund has lost about 43 percent this year, says U.K. stocks could slump 80 percent as the economy is roiled by a recession and higher inflation following the vote to leave the European Union.

Shares will come under pressure after the FTSE 100 share index climbed 30 percent over five years even as earnings fell by 80 percent, the money manager said in a letter to investors last week seen by Bloomberg News. Odey Asset Management has short positions -- bets the stocks will fall -- in companies including Tullow Oil Plc, Intu Properties Plc, and ITV Plc.

“We are now destined to have a recession in the U.K. as well as inflation,” Odey wrote. “It will be difficult for the stock market to remain above all of this.” An official at the $8.8 billion London-based investment firm didn't respond to a call and e-mails seeking comment.

Odey, who spoke in favor of Brexit before the vote in June, hasn't made money at his main Odey European Inc. fund since 2014, when it gained 5.5 percent. He was down almost 13 percent last year.

Business Insider reported the news from Odey's newsletter earlier.

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The FTSE 100 share index has climbed almost 10 percent since the Brexit vote as a weaker pound boosts exporters. Odey said currency weakness could lead to the inflation rate climbing above 3.5 percent. Consumer-price growth reached 1 percent in September, the fastest since 2014.

The money manager, who has been a vocal critic of quantitative easing, said Bank of England Governor Mark Carney “is really under pressure and should be raising interest rates, but it now looks as though a rise in interest rates will be over his metaphorical dead body.”

To contact the reporter on this story: Nishant Kumar in London at nkumar173@bloomberg.net. To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Michael Shanahan, Ross Larsen