Hedge funds posted strong returns in January on the back of rising risk appetite and rallying global equity markets. The Eurekahedge Hedge Fund Index was up 1.98 per cent during the month, while the MSCI World Index gained 4.66 per cent.
80 per cent of hedge funds reported positive performance in January, compared to the 2012 monthly average of 60 per cent. In particular Asia ex-Japan and Eastern Europe & Russia hedge funds outperformed underlying markets, up by 5.03 per cent and 7.67 per cent respectively whilst Japanese hedge funds witnessed the strongest January return on record. The asset-weighted Mizuho-Eurekahedge Asia ex-Japan Long Short Equities Index was up 4.64 per cent during the month.
Following on from positive performance end-December, markets continued their upward trajectory through January. Markets started trending after US leaders reached an agreement to avert the 'fiscal cliff' and were further supported by positive macro-economic data. Concerns of a global slowdown waned in the wake of upbeat news from Europe, the US and China while corporate earnings added greater momentum to the rallies.
Hedge funds across all regions posted positive returns for the month with Emerging Europe and Asian hedge funds leading the way. Asia ex-Japan funds also outperformed the broad Asian market indices; gaining 5.03 per cent during the month while the MSCI Asia Pacific ex-Japan Index was up 3.02 per cent. Top performing funds reported gains from the rallying equities, the power sector and healthy IPO activity in the region. Exposure to China was also profitable for most Asian managers – 4 out of the top 10 performing funds for January employed a Greater China regional mandate.
A rush of investment from speculators and hedge funds has made Japan's stock market one of the best performers in the world in recent months. But the longevity of the rally will depend on whether mainstream investors see enough signs of economic improvement to jump in, market participants say.
"The idea that things may be changing in Japan has prompted a lot of interest in what happens next,'' says Campbell Gunn, Japan head for asset manager T. Rowe Price which holds more than USD5 billion in Japanese equities out of USD577 billion under management world-wide. Still, he says, "as investors have not seen a sustained bull market for such a long time, many are going to wait until we can see further evidence'' of efforts to change Japan's economic structure before plowing more money into shares.
Japanese stocks have soared 30 per cent in the past three months, responding to promises by the new government to bring the economy out of a 20-year funk and beat deflation. So far, the boom has been largely sustained by a weakening yen. Japan's Nikkei Stock Average is hovering just below the level of 11,463.75—the highest in more than four years—it hit last week, days after Economy Minister Akira Amari said in a speech that he hopes to see the market go to 13,000 by the end of March.
Aggressive talk by politicians about weakening the yen has spurred foreign investors to buy a net Yen3.3 trillion (USD36 billion) of Japanese equities over the 12 weeks through Feb. 1, according to the Tokyo Stock Exchange. But market participants say the buyers have largely been short-term investors such as hedge funds that are trading in derivatives or Nikkei futures and options. Buying in the futures market tends to drive the cash market higher.
Most longer-term investors have been holding back, saying they have been burned by false dawns in Japanese shares before, and want to see signs of real economic change before they invest more.
Kinetic Partners, a global adviser to the financial services industry, has appointed Julian Korek as CEO. He will also lead an expanded management team.
Two senior former regulators, Andrew Shrimpton and Monique Melis, have been appointed to the management team along with Geoff Varga, who leads the corporate recovery and restructuring practice, and Nick Matthews, head of the forensic practice.
In addition David Butler, one of the founding members, will be leaving the firm in the near future and will be pursuing other opportunities.
The company has also strengthened key business lines. The most significant new hires made over the last few months include: Kim Frisinger, leading the forensic team in Hong Kong; Caroline Gibbs as a director in the compliance team in London; Deb Weston as the member in charge of the global audit team; and Gary James, leading a specialist China tax team in Hong Kong.
Miranda Poon is to represent Old Mutual Asset Management, the US-based global asset management business of Old Mutual, affiliates in Asia (excluding Japan), developing institutional business regionally. Previously, Poon worked as the Hong Kong-based director of the institutional advisory group at American Century Investments where she led business development efforts in North Asia.