According to Singapore-based hedge fund research and fund advisory firm GFIA, medium sized Asia (ex-Japan) long-short equity funds – those that manage USD250 million to USD750 million – perform the best.
According to GFIA’s July “Insight” report in 2008, USD450 million to USD750 million was the sweet spot for long-short equity managers. In 2006, those figures were USD150 million to USD300 million. And in 2004—a period when market capacity was more limited—the best performers had assets under management of USD50 million to USD100 million.
The report also quantifies the degree of shrinkage of the Asian hedge fund industry over the past three years, finding that on average, 60 per cent of Asian hedge funds are still managing at least 20 per cent less capital than in 2007.
“Although the trend is for the performance sweet spot of Asian equity hedge funds to increase over the years, allocators still need to be very aware of the appropriate size of fund to maximize likely performance in Asia," says Peter Douglas, principal of GFIA and Asia-Pacific representative director of the Alternative Investment Management Association.
"Alpha is never scalable, and our research confirms this," adds Douglas. "The average size of Asian hedge funds has still not recovered from 2008 redemptions, and there’s therefore a current opportunity for allocators to participate in right-sized funds.”
A Singapore-based hedge fund manipulated prices in the Japanese equity market and should pay a 431 million yen (USD4.38 million) fine, Japan’s securities regulator has said, which would be biggest ever imposed against a non-Japanese firm for market manipulation.
The Securities and Exchange Surveillance Commission (SESC) said on Wednesday that Juggernaut Capital Management inflated the share price of real estate developer Rise Inc for 26 business days during March and April last year.
Efforts to contact Juggernaut founder Yashwant Bajaj in Singapore were unsuccessful.
The SESC said it will seek approval from the Financial Services Agency to fine Juggernaut 431 million yen (USD4.38 million). The FSA typically approves requests from the regulator to impose fines.
SESC said Juggernaut had placed large buy orders or traded heavily right before the close of the market sessions during the 2012 period through a fund in the Cayman Islands, which gave the impression to participants that Rise shares had strong demand.
The regulator estimated Juggernaut made about 200 million yen through illegal trading activities.
Juggernaut would be the third non-Japanese company fined by the SESC for manipulation or insider trading.
Bullish positions on the Chinese currency have become among the most profitable trades for the first six months of this year for several Singapore-based hedge funds in a counter-intuitive bet, given the pessimism about economic prospects on the mainland.
After reaching a peak in February, the renminbi has fallen nearly 2 per cent against the dollar. However when compared with the downward moves of other currencies, the renminbi has enjoyed relative strength. Year to date, the Chinese currency was the only one out of the eight currencies JPMorgan surveys in its Global Data Watch that investors would have made money on against the dollar.
The relative stability and strength of the renminbi has surprised many. The Koreans are enraged at the Japanese efforts to get the yen down; they believe the arrow of currency depreciation, the only real arrow the Japanese have so far actually launched, is pointed directly at the won. But the Chinese have tolerated relative renminbi strength, especially against its trade rivals, despite the fact export growth and the current account surplus are slowing sharply.
The renminbi is slowly acquiring a haven-like status at a time when other currencies are oscillating dramatically, even though that stability is a function of capital controls.
Jeffrey Yap, former head of Asian fixed-income trading at a unit of Mizuho Financial Group Inc., plans to start his own credit-focused hedge fund in Hong Kong.
As reported by the Financial Times Yap, who worked for Mizuho Securities Asia Ltd. until May, will be joined at Ark One Ltd. by two other founding partners he declined to identify. They plan to open the fund to investors in mid-August, pending license approval by the city’s Securities and Futures Commission, he said in an interview in Hong Kong on Tuesday.Yap is the latest credit trader to start a fund amid record debt sales in the region spurred by low interest rates
and yield premiums for risky borrowers, combined with regulatory relaxation. Equity hedge funds still account for 71 per cent of regional industry assets, compared to 27 per cent globally, according to Chicago-based Hedge Fund Research Inc.An Asia-based institution has committed an initial USD50 million toward the fund, which will invest in public and private credit in the region with a focus on
China, Yap said. The institution has the option of investing another USD50 million over the first 12 months, he added, declining to identify it citing a confidentiality agreement.Yap plans to raise USD250 million for the fund by the end of its first year, inclusive of the money from the institution.
As much as half of the fund’s investment may be in China, Yap said.
