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Komfie Manalo, Opalesque Asia: Hedge funds are bleeding slowly while the market hemorrhages, said Lyxor Asset Management in its latest alternative investment industry barometer for September.
Lyxor said, "Pressure remained on the L/S Equity Long bias funds. They continued to underperform, with broad markets bleeding back to the end-of-August lows. Their drawback accelerated by month-end on the healthcare sector’s debacle. They held their largest allocation in the non-cyclical consumers sectors (which includes healthcare stocks)."
It added that the Hillary Clinton’s tweet, tackling drug prices hikes at one specialty-drug company, resulted in a sudden reassessment of the whole sector’s revenues and M&A prospects.
"Indeed, these drug pricing anomalies reflect a broader transformation of the healthcare space since 2014. Since then, waves of biotech and generic companies’ acquisitions granted pharma with much greater pricing power. The current correction might be bringing back M&A premiums and fundamental forecasts to a more sustainable profitability regime."
"Quantitative easing combined with tighter regulation is growingly questioned. The former is boosting re-leveraging, the latter is trapping liquidity within banks. Both are increasing market risks. With few obvious growth gears in sight, we expect moderate and riskier asset returns." says Jean-Baptiste Berthon, senior cross asset strategist at Lyxor AM.
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