A Goldman Sachs note has revealed that Japan-focused hedge funds saw their steepest daily performance loss on record on Monday, according to a report by Reuters, amid a global stock rout triggered by disappointing US jobs data and last week’s Bank of Japan rate hike.
Japanese stocks plunged 12% on Monday, resulting in “large performance” drawdowns for hedge funds trading on fundamental company values, Goldman Sachs reported.
By the end of the Asian trading session, Japan-focused hedge fund managers had lost 7.6% over the past three trading days with Monday’s 3.7% loss marking the largest single-day performance decline ever recorded by Goldman Sachs.
The losses wiped out all of the YTD gains recorded by the hedge funds leaving their performance flat for the year, according to the note.
The stock market turmoil on Monday saw Japanese shares at one point suffer a loss greater than the infamous 1987 “Black Monday” crash as fears of a US recession drove investors to abandon risk assets, and bet instead on Federal Reserve rate cuts to support growth.
Prior to this market downturn, July saw the highest influx of hedge fund trades in Japan in nine months with gross total and net allocations to Japan remaining near four-year highs as of Friday, the bank added.
