Opalesque Industry Update - Expectations for renminbi revaluation attract investment, hedging and speculation
Investors allocated broadly across hedge fund strategies and regions, with primary interest in Event Driven and Pan-Asian focus, including both Emerging and Developed Asian economies. Event Driven strategies, which focus on Distressed, Shareholder Activist, Merger Arbitrage and other Special Situations, received the majority of new investor capital. Equity Hedge and Macro funds also attracted new capital, the latter of which focus on global currency, commodity and interest rate positions. By geographic focus, investors shifted assets from dedicated Emerging Asia funds into funds focused on Japan and broadly across Pan-Asia.
While the dynamics of Asian funds generally mirrored the broader hedge fund industry, they also diverged in some respects.
For example, Asian Equity Hedge funds experienced an increase of $1.7 billion as a result of strong performance over 2Q10, a sharp contrast to Equity Hedge funds globally, which experienced a performance based decline of $23 billion in the quarter. Furthermore, Asian-focused Relative Value Arbitrage (RVA) funds experienced losses of $2.6 billion as a result of performance, which contrasts to RVA funds globally which saw an increase of $1.1 billion. Finally, Asian-focused funds employ higher levels of leverage than US and European funds, with the Asian region having the greatest percentage of funds employing between 2-5 and 5-10 times investment capital.
HFR Industry Summit coming to Asia
“Powerful trends continue to shape the growth and development of the Asian hedge fund industry, as global investors look to access the complex but superior growth dynamics in Asian financial markets,” said Kenneth Heinz, President of Hedge Fund Research, Inc.
“Access to capital, banking stability, limitations on foreign investment into China, utilization of listed futures contract on the Chinese equity market and the prospect of modification to foreign exchange rate policy are some of the most central themes, not only to the Asian hedge fund industry growth, but to the global macro framework for investing across asset classes in coming years.”