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Alternative Market Briefing

Hedge funds shorting Aberdeen Asset, see more trouble ahead

Wednesday, August 12, 2015

Komfie Manalo, Opalesque Asia:

Hedge funds are shorting Scottish firm Aberdeen Asset Management as they expect that concerns on China will further see more trouble ahead, Bloomberg reported citing data from Markit.

The report said that short interest in Aberdeen rose 7.4% or shares outstanding in August from 4.2% in January. Investors have been pulling out their money from Aberdeen as emerging markets stocks plunge. Aberdeen has invested more than 25% of its assets in emerging economies.

David McCann, an analyst at London-based Numis Securities Ltd., commented, "If you’re looking for a short-term trade and you’re looking for something to short, it’s the perfect play here. If emerging-market assets do lose further money as interest rates go up, which many speculate they will, then you’re not too late to the short trade."

He added that the impending rate hike by the Federal Reserve later this year would further erode confidence in emerging markets. China’s decision to devalue the yuan sent Aberdeen’s stocks to two-year low. Hedge funds, including Odey Asset Management LLP and Rob Citrone’s Discovery Capital Management have filed their short positions in Aberdeen.

Aberdeen has declined to comment on the short positions, Bloomberg said.

"The shorts may be looking for this tipping point" McGinnis said. "The bearish s......................

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