Hedge fund activity in Asia has surged so far this year as the Bank of Japan sought to reinflate the country’s economy with quantitative easing, bond buying and other stimulus measures, according to industry analysis and consulting firm HFR.
‘The past four months have been an unprecedented period for Japanese capital markets and have created tremendous opportunities for Asian hedge funds in 2013,’ says HFR president Kenneth Heinz in a press release. ‘Hedge funds in Japan and throughout Asia will continue to benefit from these developments and are likely to attract increased investor capital to access these powerful and pervasive market trends.’
In the first quarter, total capital of hedge funds focused on Asian investment jumped 7.6 percent to almost $95 bn, the highest since the industry peaked in 2007 before the global financial collapse, HFR adds. More than $1.3 bn in new net capital was invested in Asian hedge funds in the quarter, the largest net investment since the third quarter of 2011.
The increased activity and Japanese stimulus plan helped push the HFRX Japan Index up 11.7 percent in the quarter, while the HFRX China Index gained 6.9 percent, HFR says. At the same time, the HFRX Asian (ex Japan) Index climbed 6.7 percent.
HFR data shows the total number of hedge funds focused on Asia increased to more than 1,150, with more than 500 investing in emerging Asia, 370 focusing on Japan and 270 focusing on all of Asia. The total has increased from 1,128 six months ago.
The consulting firm also finds a continued trend toward setting up headquarters in Asia, with the percentage of locally managed hedge funds rising while the number of funds managed out of the UK and the US is dropping. Almost a third of all Asian hedge funds now operate out of China and 11 percent are managed in Singapore. Together, Japan and Australia account for about 9 percent.
HFR says 70 percent of Asian hedge fund assets focus on equity hedge investment strategies, compared with 27 percent globally. But Asia-focused funds are diversifying strategies as the market matures, and include macro, relative value arbitrage and event-driven strategies.
In a previous release last month, HFR said the hedge fund industry had grown globally in the first quarter of 2013 at its fastest pace since 2010. Total assets under management rose $122 bn to $2.74 tn, an all-time record, HFR said. Investors allocated a net $15.2 bn in new capital in the quarter.
