Asia hedge funds capitalise on Japanese Rally, Chinese recovery

The first quarter of 2024 showcased robust performances for Asian hedge funds driven by a sustained rally in Japanese equities and a tentative turnaround in Chinese markets, buoyed by a surge in artificial intelligence (AI) stocks.

With most stock markets in Asia closing the first quarter on a high note, hedge funds employing Asian equities long/short strategies reported a solid 2.9 per cent increase, as revealed by data from Eurekahedge.

Among multi-strategy hedge funds focusing on Asia and investing across various asset classes, including equities and commodities, a notable 3.7 per cent return was observed, according to Eurekahedge data as of April 16.

Pan-Asia funds with exposure to Japan particularly flourished during this period. The Panview Asian Equity Fund, managed by former Goldman Sachs partner Ryan Thall, soared by an impressive 15.5 per cent, propelling its assets under management to surpass $1 billion.

Similarly, Singapore-based FengHe Group's Asia Fund, managing $3.3 billion, delivered a noteworthy 6.6 per cent return for the quarter, building upon its strong performance of 9.2 per cent gain in 2023.

The surge in Japanese stocks, with the Nikkei share index reaching record highs and registering a remarkable 21 per cent jump in the first quarter alone, played a pivotal role in driving returns for equity hedge funds focused on Japan, which saw a notable 5 per cent increase during the period, according to Eurekahedge.

In China, despite recent years of turbulence, some hedge funds managed to navigate the volatility effectively. The MSCI China index rebounded by 10 per cent since January, providing opportunities for hedge funds to capitalize on.

Investing in sectors such as energy, industrials, internet, and high-yield stocks proved fruitful for many, with notable gains seen in Chinese food delivery giant Meituan. Hong Kong-based First Beijing reported a solid 6.3 per cent return, largely attributed to bullish bets on Meituan.

Moreover, hedge funds leveraging on the AI supply chain across the US, Taiwan, and mainland China also saw success. Grand Alliance Asset Management's Sino Vision Market Neutral Fund reported a 6.1 per cent net gain for the quarter, primarily driven by AI-related trades.

However, not all players emerged unscathed. China's quantitative hedge funds faced challenges following regulatory crackdowns in February, resulting in double-digit losses for some funds like Jupiter Tactical Trading Fund and Ubiquant's overseas quantitative funds.

(With Reuters inputs)