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Alternative Market Briefing

APS China Alpha Fund (+94.9% in 2009) increased shorts, reduced net exposure in wake of tightened monetary policy

Monday, March 08, 2010

From Sagar Chakraverty, Opalesque Asia:

APS Asset Management (APS), a Singapore-based fund management firm saw its China Alpha Fund return +94.9% in 2009 and -0.5% in Jan-10. The low performance of China A-shares in January was primarily due to government’s lending restrictions on banks and introduction of administrative measures to control property price rise. The Shanghai A-share index dropped 8.8% in January while the Shenzhen stock exchange saw a decline of 6.8%.

The Chinese government’s decision to restrict its monetary policy has dampened investors’ sentiments. On 12-Jan-2010, the People's Bank of China (BOC) raised the reserves requirement for local banks by 0.5% to 15% of their deposits, only hours after raising the interest rates on its one-year bills in an attempt to curb loan growth and cool economic activity, the Telegraph reported.

Bank lending is targeted at around 7.5tln yuan ($1.1tln), a drop of 22% from 2009 levels, which was 9.5 tln yuan ($ 1.39 tln).

China's yuan-denominated A-share market will become the world's third largest in the next 10 years, with its value reaching $10tln in 2020, according to a China Daily ......................

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