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Alternative Market Briefing

Hedge fund investments in emerging markets rise in Q2

Monday, August 26, 2013

Kenneth J. Heinz
Precy Dumlao, Opalesque Asia:

Hedge funds’ confidence in emerging markets remain at positive levels as investments in the sector rose in Q2 of 2013 even as currencies across the globe fell during the period, according to data provider Hedge Funds Research.

According to the latest HFR Emerging Markets Hedge Fund Industry Report, hedge funds assets invested in emerging markets reached a record $154.9bn (Russian Ruble 5.1tln, Brazil Real 371 bn, Indian Rupee 9.8tln, Saudi Riyal 580 bn).

"In contrast to the recent economic improvement in developed markets, the Emerging Markets investment environment has deteriorated and become more challenging, with EM hedge funds effectively posting impressive gains, negatively correlated to the recent declines in both EM equities and currencies," said Kenneth J. Heinz, President of HFR.

He went on to say, "The combination of variables , including expectations for tapering of U.S. bond purchases, continued social and secular unrest across Egypt and Syria, and policy action to reduce the sharp declines in the Indian Rupee and South African Rand suggests continued EM asset volatility in coming quarters. Through this environment, EM hedge funds continue to be well positioned to insulate investors from currency, commodity, equity and sovereign fixed income weakness and to tactically position for opportunities created by fluid political......................

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