Thu, Aug 21, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Asian hedge funds suffer in ‘gloomy’ August

Tuesday, September 06, 2011
Opalesque Industry Update – Asian hedge funds may be experiencing rapid growth over the past several months, with some insiders in the region outpacing their Western counterparts, but the positive outlook on Asian hedge funds was not enough to spare the region’s industry from the disastrous month of August.

According to a report by the Financial Times, even some of the veteran hedge fund managers in Asia have described August as the most difficult month for them, especially for long and short managers.

Richard Johnston of Albourne Partners (Asia), said that August was very tough for their clients. While hedge fund manager Li Ning disclosed that many investors were forced to trim down their positions last month at the height of the market volatility, and others held on to their shares. Ning told The Times, “It looked like there were huge forced unwinds. But nobody can figure out who it is.”

“Most of the hedge funds were forced to dump the longs they love and buy back the shorts they hate,” says the chief operating officer of one major equity fund based in Hong Kong. Industry analysts say that the results of August highlights the fact that while the Asian hedge funds space has shown significant improvement over the last couple of years, the region still has a lot of catching up with its Western peers.

Although last month’s showing clearly indicates that the Asian hedge fund industry is also vulnerable to market volatility, there are still more room for optimism. Singapore-based hedge fund data provider Eurekahedge Pte., reported last week that the Asian hedge funds industry could grow to $180bn over the next 12 to 18 months as investors look to Asia amidst economic slumps in the U.S. and Europe.

From $14bn at the start of 2000, the Asian hedge fund industry grew to $134bn as at the end of June this year. More importantly, the number of funds has grown eight times to 1,235 since 2000, the report said, citing increased popularity of hedge funds and the easing of regulatory restrictions in the region.

In Greater China alone, there are an estimated 300 hedge funds located there, representing a rise of nearly 32.9% in the last quarter. Geographically, the number of hedge funds in China and Singapore also reported a significant increase in the second quarter of this year (See Opalesque Exclusive: here)

Hedge Fund Research’s Josh Gu said, "In the second quarter of 2008, there were 189 funds located in China (Greater China, so including Hong Kong). And in the second quarter of 2011, the number increased to 281. After the financial crisis, China became the third country with the largest amount of hedge fund firms located there, following the U.S. and the U.K. So there are more hedge funds in Greater China than in Europe excluding U.K. for example." Another source of optimism for the Asian hedge fund industry is a separate report also published last month which showed that American companies are competing to manage Hong Kong based hedge funds.

According to the report, U.S. companies attempting to get a slice of funds movements have set their sights in Hong Kong hedge funds as the U.S. economy and the European sovereign debt issues continue to generate concerns amongst investors and move their money into Asia.

Many hedge funds which left Asia at the height of the 2008 financial crisis, are back in the region to set up operations. But the money trail to Hong Kong has attracted not only hedge fund managers but big Wall Street banks and private equity firms, including Citigroup, Blackstone Group, Carlyle Group and TPG Capital which have been hiring additional personnel in Hong Kong and Asia to generate capital from institutional investors such as pension funds and sovereign wealth funds.
Precy Dumlao

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Institutions – Texas Employees sets 2015 tactical plan for alternatives, CalPERS' real estate consultant cautions the pension fund's investment committee, Why Sunsuper likes hedge funds[more]

    Texas Employees sets 2015 tactical plan for alternatives From PIOnline.com: Texas Employees Retirement System will invest in up to four new hedge funds in the next fiscal year, which begins Sept. 1. Trustees approved 2015 tactical investment plans for the hedge fund, private equity and in

  2. Private equity follows hedge funds into reinsurance for long-term capital[more]

    From Artemis.bm: It’s not just hedge funds that are entering the insurance and reinsurance market in search of so-called long-term capital to put to work in their strategies, private equity firms targeting the space are also seeking opportunities to add assets under management. The entry of large pr

  3. North America – New York City’s next hot neighborhoods targeted with property funds[more]

    From Bloomberg.com: New York’s real estate world is filled with tales of ordinary people who bought property decades ago and saw values skyrocket to the millions. Seth Weissman is seeking investors to get in early on the next hot neighborhoods. The veteran of Goldman Sachs Group Inc. and hedge

  4. Investing – George Soros bets $2bn on stock market collapse, Warren Buffett's Berkshire reveals Charter stake, cuts DirecTV, Hedge funds lusting to cash out of MGM, Top hedge fund managers are buying Ally Financial, Hedge funds dumped 5m Herbalife shares in Q2, Paulson & Co hedge fund ups Puerto Rico real estate bet, Netflix Inc., Citigroup Inc, Google Inc are top new picks in Tiger Management’s 13F[more]

    George Soros bets $2bn on stock market collapse From Newsmax.com: Billionaire investor George Soros has increased his financial bet that U.S. stocks will collapse to more than $2 billion. The legendary hedge fund manager has been raising his negative bet on the Standard & Poor's 500 Inde

  5. Investors now net short S&P500 and increased Russell shorts, technicals suggest further selling[more]

    Komfie Manalo, Opalesque Asia: Market Neutral funds increased their market exposure to -1% net short from -6% net short last week, according to Bank of America Merrill Lynch’s Hedge Fund Monitor. The report also added