Home Business Asia hedge fund losses rise in Q3, set for worst year since...

Asia hedge fund losses rise in Q3, set for worst year since 2008

The firm’s HFRI Asia ex-Japan index dropped 7.7% in September. (file)

Hong Kong:

Data provider HFR said the hedge fund focused on emerging Asia posted its biggest monthly loss in years in September and is poised for its worst year since the 2008 financial crisis.

The firm’s HFRI Asia ex-Japan index dropped 7.7% in September, the worst single-month performance since March 2020, HFR data showed on October 17. Third quarter performance was negative 10.4%, compared to a decline of 4% in the second quarter. ,

Extended losses came as Asian markets faced mounting headwinds from a blatant Federal Reserve rate hike, uncertainties at the once-communist Party Congress of China and rising Sino-China tensions over Taiwan and technology.

Benjamin Low, senior investment director at Cambridge Associates, said: “This (Asia) has been a very painful third quarter for hedge fund managers’ performance. Managers are monitoring the 20th Party Congress for some clarity on investments related to China.” “

The week-long congress, which began on Sunday, is expected to detail China’s policy objectives and re-elected incumbent leader Xi Jinping for a third term setting a precedent.

According to Reuters calculations based on HFR data, the HFRI index fell 22.8% in the first nine months, the biggest performance decline since the 2008 financial crisis when the index fell 26.4% for the same period.

China managers led losses in September, with the HFRI’s China index falling 8.5%, accompanied by a sell-off in equity markets. Repeated lockdowns in several Chinese cities, a risk-off mode ahead of party congresses and geopolitical risks weighed on the market sentiment.

Hong Kong’s Hang Seng index hit an 11-year low in September and fell 13.7% for the month, the Shanghai Composite Index fell 5.5%, while the MSCI China index fell 9.7%.

Other emerging equity markets in Asia such as Taiwan and South Korea, which are sensitive to inflation, were also down more than 10% in September.

BofA Securities said in a note that the equity long/short strategy was the worst performer, while market neutral and multi-strategy managers had the best performance in September and so far.

Analysts say the broadness of central bank policies and frequent macro headlines have created profitable trading opportunities for macro hedge funds globally.

“We expect macro funds to continue to do well over the next 6-12 months,” Low said.

The HFRI Asia East-Japan Index tracks funds that target more than 50% of their investments in the Asia East-Japan region. Japan-focused hedge funds performed relatively well, with the HFRI Asia Index which includes Japan, down only 3.3% in September and down 3.9% this year.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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