Opalesque Industry Update - HFRX reports that global financial markets posted mixed gains in February, as active currency trading, robust corporate M&A activity and fluid political developments continued to shape investor expectations for 2013. |
The firm writes: "US equities posted gains for the month, with leadership from Technology, Semiconductors and Consumer Durables partially offset by declines in Commodity and Energy related exposures. Uncertainly over political elections in Italy contributed to a mixed performance for European equities for February, with a sharp decline in Italian equities leading smaller declines in Spain and the Netherlands, while the UK and Switzerland posted gains. Asian equities were also mixed on continuation of stimulus and inflation targeting measures by the Bank of Japan; the Nikkei, Australia and the Philippines posted gains while equities in China, Hong Kong and India posted declines. The Euro posted a sharp decline against the US dollar on the Italian elections, while the British Pound Sterling touched a 30 month low against the dollar on continued weak growth and a credit ratings downgrade; the US dollar also gained against the Swiss Franc and Japanese Yen. Yields declined across US, Germany, UK, France and the Netherland, with a notable spike in Italian bond yields. Credit and M&A remained strong, with transactions and special situations activity including Heinz, Comcast/NBC Universal, American-US Airways, Liberty Global /Virgin Media. Commodities posted declines across most Energy, Metal & Agricultural exposures, with Oil, Gold, Silver & Wheat all falling for the month. Hedge Funds posted gains for the 7th month out of the last 8, with the HFRX Global Hedge Fund Index gaining +0.43% and the HFRX Market Directional Index posting a gain of +0.62%.
HFRX Equity Hedge Index gained +1.17% in February, posting its 9th consecutive monthly gains for the first time since 2003. The HFRX Fundamental Value Index posted a gain of +1.72%, with the 2-month gain including January comprising the strongest two month gains since 2010. The Index had contributions across European and US sectors including Industrial, Financials and Energy. The HFRX Fundamental Growth Index gained +0.32%, with contributions from global Emerging Markets, US small cap, Cyclical and Financial sectors. HFRX Market Neutral Index gained +0.19% for the period, with gains across fundamental small cap and pairs-trading strategies.
HFRX Event Driven Index posted a gain of +0.45% in February, as corporate activity continued at a robust pace during the month with significant new strategic and financial transactions announcements, as credit markets for deal-financing remained liquid and accessible. The HFRX ED: Special Situations Index gained +1.06%, with contributions from American-US Airways, Anheuser-Busch-Grupo Model, Office Depot-OfficeMax, as well as activist positioning in Apple and Herbalife. The HFRX Merger Arbitrage Index gained +0.26%, with contributions from Heinz, Metlife, PSS World Medical, Liberty Global /Virgin Media, Dell transactions. HFRX ED: Distressed Index gained +0.12% as credit markets remained open accessible to financing leveraged M&A transactions.
HFRX Relative Value Index gained +0.09% in February, with contributions from Convertible and Multi-Strategy Fixed Income Arbitrage strategies. The HFRX RV: Convertible Arbitrage Index gained +1.45% with gains concentrated in both directional credit and volatility exposures in Asia Pacific convertibles; the HFRX Fixed Income - Credit Index gained +0.66%. The HFRX RV: Multi-Strategy Index posted a modest gain of +0.03%, with positive contributions from commodity spread trading strategies and Global credit exposures. The HFRX MLP Index gained +1.92% as MLPs on strong demands for high quality yield from institutional and retail investors.
HFRX Macro Index posted a modest decline of -0.09% in February, with positive contributions from discretionary fixed income strategies and Multi-Strategy managers offset by Systematic CTA and currency exposures. The HFRX Macro: Systematic Diversified Index posted a decline of -0.51% on commodity weakness and short equity exposure. The HFRX Emerging Markets Index posted a gain of +0.24% with contributions across EM currencies, equities and fixed income.