Thu, Mar 28, 2024
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Industry Updates

HFRI China Index posts steep decline as equities, renminbi losses accelarate

Friday, November 16, 2018
Opalesque Industry Update - Chinese hedge funds posted sharp declines in October as both global equities and the Renminbi fell. The HFRI Emerging Markets: China Index lost -7.76% in October, the steepest monthly decline since retreating -9.9% in January 2016, and brought down the YTD 2018 return to -16.96%, putting it on pace for the worst annual performance since falling -31.3% in 2008.

Losses were much more muted for Japanese hedge funds in October, with the HFRI Japan Index losing -1.5% for the month, dropping the YTD return to -2.3%, although this tops the decline of the Nikkei 225 by 120 basis points.

Total Asian hedge fund capital fell to $118.6 billion in 3Q18 (823 billion RMB, 13.4 trillion Japanese Yen ¥, 8.5 trillion Indian Rupee, 133 trillion Korean Won), a quarterly decline of $2.5 billion, according to the latest release of the HFR Asian Hedge Fund Industry Report, released today by HFR, the established global leader in the indexation, analysis and research of the global hedge fund industry. Total Asian hedge fund capital had reached a record of $123 billion in 1Q18.

Despite the steep losses for the HFRI China Index in October, the decline still tops the YTD decline of the Shanghai Composite Index by nearly 430 basis points.

Other Asian hedge fund indices also experienced sharp declines, with the volatile HFRI Emerging Markets: India Index falling -27.5% YTD, though losses were more concentrated in September, when the Index fell -11.6%, rather than in October, when it lost -5.8%. The YTD performance for the HFRI EM: India Index is also on pace for the worst annual decline since losing -36.0% in 2011.

Top strategy areas of Asian-located hedge funds included both uncorrelated Macro and fixed income-based Relative Value Arbitrage, with these posting gains of +1.1 and +1.5%, respectively, YTD through October. Cryptocurrency exposure also detracted from Asian hedge fund performance, with the HFR Cryptocurrency Index dropping -8.3% in October.

"Continuing the trends which started in 2Q, accelerating losses across Chinese equities, currency and cryptocurrency contributed to the worst performance month for the HFRI China Index since January 2016", stated Kenneth J. Heinz, President of HFR. "Through the middle of the fourth quarter, asset implied and realized volatility remains extremely high, with oscillating patterns of steep losses and sharp recoveries dominating an increasingly volatile trading environment. Asian hedge fund capital has eroded modestly as a result of losses and risk, but investors continue to perceive Asian hedge funds as a defensive position, allowing them to access the opportunities created by this intense volatility but with more muted or limited downside risk," Heinz said.

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. KKR raises $6.4bn for the largest pan-Asia infrastructure fund[more]

    Laxman Pai, Opalesque Asia: The New York-based global investment firm KKR has raised a record $6.4bn for its second Asia-focused infrastructure fund, underlining investors' continued appetite for private markets. According to a media release from the alternative assets manager, the figure top

  2. Bucking the trend, top hedge fund makes plans for a second SPAC[more]

    From Institutional Investor: SPACs aren't dead. At least not to the folks at Cormorant Asset Management. The life sciences firm, whose hedge fund topped its peers in 2023, is confident it will match the success of its first blank-check company. Last week, the life sciences and biopharma speciali

  3. Benefit Street Partners closes fifth fund on $4.7 billion[more]

    Bailey McCann, Opalesque New York: Benefit Street Partners has closed its fifth flagship direct lending vehicle, BSP Debt Fund V, with $4.7 billion of investable capital across the strategy. Benefit Street invests primarily in privately originated, floating rate, senior secured loans. The fun

  4. 4 hedge fund themes that are working in 2024[more]

    From The Street: A poor earnings report from Tesla (TSLA) has not hurt the indexes on Thursday. The decline in Tesla stock, which is losing its position in the Magnificent Seven pantheon, is more than offset by strong earnings from IBM (IBM) and ServiceNow (NOW) . In addition, the much higher-t

  5. Opalesque Exclusive: A global macro fund eyes opportunities in bonds[more]

    Bailey McCann, Opalesque New York for New Managers: Munich-based ThirdYear Capital rebounded in 2023, following a tough year for global macro. The firm's flagship ART Global Macro strategy finished the year up 1