Market Insights

Major Investment Shifts in Asia, as China Hedge Funds Plunge

 

Asia saw major investment shifts over the past year, with more hedge funds closing than opening as interest in China dropped noticeably.

Only 62 new hedge funds launched in Asia in 2023 – the lowest number since 2009 – and less than a quarter (15) of those were  China-focused funds, data provider Preqin revealed.

With China enduring an economic slowdown, interest has shifted to Japan, and the number of Japan-focused funds more than doubled to 19.

 

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The figures underscore the shift away from China as the world’s second-largest economy struggles amid a property sector crisis and trade tensions with the United States and Europe.

Instead there is rising demand for Japan, pan-Asia, and multi-manager strategies, market participants say.

 

74 funds closed last year, half of them in China

Liquidations outpaced launches in 2023 with 74 funds closing shop and nearly half of those were China-focused funds, the data showed.

Only 15 hedge funds with a focus on China were launched, plummeting from 34 in 2022 and marking the lowest number since 2004.

At least three multi-manager hedge funds which invest in a variety of asset classes are in the pipeline for this year, according to market participants and allocators.

One of those will be launched by Arrowpoint Investment Partners, run by Jonathan Xiong, former Asia co-CEO at Millennium Management.

The firm has raised about $1 billion from investors, according to sources familiar with the matter who were not authorised to speak to media and declined to be identified. Xiong declined to comment.

Patrick Ghali, managing partner of Sussex Partners, remains cautious about the potential for much growth in new fund launches this year.

“Japan is of great interest at the moment, but a lot of investors don’t fully understand the incredible alpha opportunity of that market and are investing in long only funds instead,” he said, referring to the potential to generate returns that are higher than market benchmark gains.

 

  • Reuters with additional editing by Jim Pollard

 

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Mortgage Delinquencies in China Soared by 43% in 2023

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.

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