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Asian Hedge Funds See Considerable Success; HFRI China Index at the Helm

The most recent HFR Asian Hedge Fund Industry Report accounts that the HFRI China Index has topped the Shanghai Composite Index. This performance is by far the largest margin in a calendar year since the inception of the index in 2008. They are glad to report that Asian hedge funds have been going strong in the year 2017, and this result is one of the reflections of such.

The HFRI China Index increased to of 31.1 percent last year as opposed to 6.6 for the Shanghai Composite Index. This success continued on to January 2018 – the index gained 7.3 percent versus the 5.3 percent gain of the Shanghai Composite.

Meanwhile, the HFRI Fund Weighted Composite Index has returned an increase of 8.6 percent for 2017 and 2.8 in January.

Asian Performance

Overall hedge fund assets went up through the end of 2017 to USD122.2 billion. The performance is extraordinary, taking into account that the record in Q2 2015 was USD126 billion.

The India Index experienced a surge of 37.1 percent in 2017 and topped the BSE Sensex Index by more than 900 basis points. Indian hedge funds are also reaching the top among broad based index of EM hedge funds for 2017. The rise is parallel with HFRI Emerging Markets Index increasing by 19.5 percent. On the other hand, the India Index lost 2.2 percent in January 2018.

The HFRI Japan Index is also enjoying its success with a gain of 16.7 percent in 2017. Its Event-Driven and Equity Hedge Strategies contribute for most of the success. Asian-located Event-Driven Funds also rose up by 23.8 percent and Asian-located Equity Hedge Funds by 23.6 percent.

January was witness to the successful performance of Asian-located Equity Hedge Funds with a gain of 4.2 percent. Fixed Income-based Relative Value Arbitrage funds served as the leader of all Asian-located strategies with a January gain of 7.6 percent. The HFRI Equity Hedge (Total) Index rose by 13.3 percent while the HFRI Event-Driven (Total) Index gained 7.6 percent globally.

Great Expectations

President of HFR Kenneth Heinz stated that 2017 and the early part of 2018 proved to be a historic time for the hedge fund industry in Asia. He attributes this to considerable success in China, India and Japan, and for the outperformance of Chinese regional equity markets.

“A combination of factors contributed to this outperformance including security selection and tactical exposure adjustment, as well as positions across non-equity exposures including currency, commodity, fixed income and event-driven situations. Recent gains in renminbi, increasing US interest rates and inflation, ongoing trade negotiations and volatile but receding geopolitical tensions are all likely to drive opportunities in Asian hedge funds in 2018,” Heinz remarks.

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