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China may follow Japan in hedge fund market
26 February 2013
Asian hedge funds have piled into Japan. Neil A O'Hara asks: will China be next?
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The Nikkei 225 Index has shot up 25% since mid-November and Asia-oriented hedge funds have gone along for the ride. Prime brokers serving Asian funds saw a huge swing in sentiment in recent months: at Credit Suisse, for example, Japan went from the largest net short country exposure in August to the largest long in January 2013.
Managers waded in with lead boots – leverage on the Credit Suisse book rose from 1.95 in December to 2.16 in January alone – and were rewarded with average monthly returns of 3.2%, the best performance in years for Asian hedge funds.
Gains like that could revive interest in Asian funds, which have struggled to attract assets in recent years. Although global hedge fund assets, now at $2.25trn, exceed pre-crisis levels, Asian funds have lagged.
Melvyn Ford, head of prime services, Asia Pacific, at HSBC in Hong Kong, estimates that Asian...
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