A pick-up in trading volumes on Shanghai-Hong Kong Stock Connect (which enables investors in Hong Kong and Shanghai to directly buy shares in each other’s markets) and lower Chinese interest rates combined to create the highest ever monthly growth in Chinese hedge fund investment last month.

Data from the latest HFR Asian Hedge Fund Industry Report shows the HFRI China Index recorded its highest monthly rise since it was created in 2008. Total global capital invested in the Asian hedge fund industry passed $120bn and the number of Asian hedge funds approached 1200.

Total capital invested in the hedge fund industry increased to a record $2.95trn at the beginning of the second quarter.

The HFRI EM: Asia ex-Japan Index gained 10.5% percent in April and is up 14.5% for the year-to-date, while the HFRI China Index is up 18.8% since the start of 2015. Inflows into Asian hedge funds through the end of Q1 totalled $1.1bn, with capital moving into emerging and pan-Asian funds only partially offset by outflows from Japanese-focused funds.

“Recent developments with Chinese equity markets, including performance and trading volume, are historic in magnitude, with significant involvement and participation from Asian-focused hedge funds attracting capital and interest from global investors,” says Kenneth Heinz, president HFR.

“It is likely that the Asian hedge fund industry is only now at the beginning of a capital growth cycle, as global investors position for continuation and extension of these gains while seeking to use sophisticated strategies to protect their portfolios from the volatility inherent in these markets.”