Unlike 1Q10, the second quarter has seen the fortunes of Asian hedge funds reverse. Against a backdrop of anticipated change in Chinese foreign exchange policy, investor capital has been flooding back into the region, to the tune of USD360 million according to Hedge Fund Research. It notes, however, that performance-based losses mean that total capital invested is down to USD74.4 billion. Most of the new capital has targeted Pan-Asia, including both developed and emerging Asian economies, with a particular investment appetite in Event Driven strategies. HFR finds that Equity Hedge and Macro funds have also attracted inflows. Interestingly, it would appear that Asian hedge fund dynamics have diverged somewhat from their global counterparts this quarter: Asian Equity funds having received USD1.7 billion whilst Equity funds globally have shed a massive USD23 billion.