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Asia hedge funds rebound in March after worst start to the year on record

SINGAPORE — Asia-focused hedge funds, including those managed by APS Asset Management, Springs Capital and Pine River Capital Management, gained in March as a market rebound helped managers claw back from the worst start to the year on record.

SINGAPORE — Asia-focused hedge funds, including those managed by APS Asset Management, Springs Capital and Pine River Capital Management, gained in March as a market rebound helped managers claw back from the worst start to the year on record.

Both the US$98 million (S$132 million) APS Greater China Long/Short Fund and the Springs China Opportunities Fund surged nearly 15 per cent, paring first-quarter losses to about 13 per cent, according to APS chief investment officer Wong Kok Hoi and an investor update from Springs.

The US$1.3 billion multi-strategy Pine River China Fund returned almost 4.7 per cent in March, cutting this year’s losses to just under 0.4 per cent, said a person in the know.

“(In January) the Chinese stock market was sold indiscriminately across the board, as if China would soon face multiple crises of historic proportions,” said APS’ Mr Wong in an interview. “A month later, sanity returned and those fears largely evaporated. Our portfolios bounced back in March and the recovery continued through April.”

Markets rallied in March and oil prices rebounded as the US Federal Reserve indicated the case for slow interest-rate hikes, allaying speculation that a strengthening US dollar will reduce demand for riskier assets.

Chinese stocks were buoyed by better-than-expected profits from some companies, signs of a stabilising economy and easing concerns about capital flows as the country’s currency gained.

Bringing Relief

The improving sentiment brought relief to Asia hedge funds, which on average dropped 5.4 per cent in the first two months of 2016, marking the worst start to the year since Eurekahedge began to compile data in 2000. They rose 3.4 per cent in March, paring the year-to-date loss to 2.2 per cent. China-focused managers, among the hardest hit earlier in the year, benefited from the stronger rally in the nation’s stocks listed both domestically and in Hong Kong.

Equity long-bias strategies contributed to gains for managers, according to Mr Mohammad Hassan, Singapore-based senior analyst at Eurekahedge. Some 94 per cent of regional hedge funds that have reported data for March posted positive returns, compared with 35 per cent in February and 13 per cent in January, he said.

A MIXED BAG

Springs benefited in March from a rebound of its key holdings in the yuan-denominated, class-A shares traded on China’s domestic exchanges, as well as a surge in Chinese property and technology stocks listed in Hong Kong, said a person with knowledge of the matter, who asked not to be identified as the fund is private. The Springs fund lost nearly 24 per cent in January.

Pine River was able to limit its losses to 4.9 per cent in January because of its flexibility to invest across assets, said the person. Unlike most China-focused hedge funds that concentrate investments in equities, the Pine River fund is multi-strategy and trades stocks, convertible bonds and credit.

For Orchid Asia Group Management, March’s gains were not enough to post positive returns for the quarter. The US$253 million Orchid China Master Fund rose 4.4 per cent in March, paring this year’s loss to 8.2 per cent, according to the firm.

Other funds that rose in March include those from Wykeham Capital, and Sylebra Capital Management. BLOOMBERG

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