Asia Hedge Funds Post Biggest Annual Returns Since the Pandemic

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Asia hedge funds rebounded successful 2024, with galore posting double-digit gains arsenic China stocks recovered, Japan’s equity rally deed caller heights and immoderate managers reached further afield for profitable trades.

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Bloomberg News

Bloomberg News

Bei Hu and David Ramli

Published Jan 22, 2025  •  5 infinitesimal read

t{s3sd0ldp60t4966un]}tkg_media_dl_1.pngt{s3sd0ldp60t4966un]}tkg_media_dl_1.png Eurekahedge Pte.

(Bloomberg) — Asia hedge funds rebounded successful 2024, with galore posting double-digit gains arsenic China stocks recovered, Japan’s equity rally deed caller heights and immoderate managers reached further afield for profitable trades.

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Equity funds managed by Aspex Management (HK) Ltd., Panview Capital Ltd. and CloudAlpha Capital Management Ltd. were among those that returned much than 35% successful 2024, often powered by artificial intelligence-related and different exertion bets, including those extracurricular the region. Among macro funds that commercialized crossed equity, fixed income, currency and commodity markets, funds of Ocean Arete Ltd. were up astatine slightest successful the precocious teens.

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That marked the archetypal twelvemonth since 2020 successful which Asian hedge funds kept gait with the planetary average, according to information from Eurekahedge Pte. It ended 3 years of wide losses fueled by the Covid pandemic, geopolitical tensions and China’s manufacture crackdowns.

While inactive hovering astatine fractional of its February 2021 peak, the MSCI China Index rebounded astir 16% past twelvemonth connected hopes that authorities stimulus volition rejuvenate the ailing economy. Japan’s Topix jumped different 18% successful 2024, bolstered by the AI frenzy and firm governance reforms. India’s Sensex gained 8.2%.

Tech Wagers 

With assets topping $9 cardinal by June, Hermes Li’s Aspex is simply a elephantine successful the Asian industry. It returned astir 38% for the year, according to radical with cognition of the matter. Trades successful technology, industrial, user and financials successful assorted countries contributed, 1 of them added, declining to beryllium much specific.

Panview’s 41% instrumentality marked the champion twelvemonth yet for the steadfast led by erstwhile Goldman Sachs Group Inc. proprietary trader Ryan Thall, according to its latest capitalist letter. The fund, which began trading successful November 2019, is connected a six-year winning streak with assets astatine astir $1.5 billion, said a idiosyncratic with cognition of the matter, who asked not to beryllium identified discussing backstage information.

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While the bulk of Panview’s investments remained successful Greater China and Japan astatine the extremity of December, the biggest bullish presumption and a ample portion of the year’s summation came from AppLovin Corp. The steadfast has stake connected the US integer selling institution expanding marketplace stock and broadening its lawsuit base, helped by higher returns connected advertizing spending from its machine-learning model, according to the missive and the person. 

Research into Chinese e-commerce companies’ advertizing spending led Panview to enactment connected the commercialized astatine the commencement of the year. Shares of AppLovin jumped much than 700% past year. It remains its largest bullish bet, the idiosyncratic said.

RAYS Capital Partners Ltd.’s Asian Technology Absolute Return Fund returned 80%, going disconnected the beaten way to find lesser-known beneficiaries from the AI boom, said Partner Nicholas Chung. 

One of its astir profitable trades was Credo Technology Group Holding Ltd., the US shaper of cables that’s riding precocious connected information halfway upgrades to rise transmission speed. Taiwan’s Asian Vital Components Co. has been tapping into expanding adoption of liquid cooling solutions for AI servers, Chung added. Lithium artillery module shaper Advanced Energy Solution Holding Co. surged connected information halfway request for artillery backup. RAYS besides counted Nvidia Corp. and ARM Holdings Plc among its apical 5 trades successful 2024, helium said.

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CloudAlpha Tech Fund returned 77%, driven by investments successful generative AI infrastructure and exertion companies, peculiarly successful the US, said a idiosyncratic with cognition of the matter. Global semiconductor and information halfway infrastructure bets powered the astir 56% surge of Singularity Tech Fund, a newer CloudAlpha pool. 

Credit Rally

Sentiment successful Asia’s high-yield dollar enslaved marketplace continued to amended past year, rebounding from a slump successful 2021 and 2022 erstwhile investors were deed hard by a question of Chinese spot developers going into fiscal distress and defaulting. The astir $530 cardinal L&R Asia Credit Alpha Fund returned 25% from progressive trading of recognition successful assorted industries crossed the region, including China, India, Indonesia, Japan, Australia, Mongolia and Hong Kong, the steadfast confirmed.

Barun Agarwal’s Factorial Fund surged astir 18%, continuing a winning streak since its inception successful 2012, said a idiosyncratic with cognition of the matter. Among its apical trades was a long-time recognition concern successful India’s Vedanta Resources Ltd. Previously weighed down by capitalist pessimism, Vedanta’s shares and bonds outperformed past twelvemonth connected an net betterment and efforts to trim leverage.

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Share terms swings of companies including South Korea’s Posco Holdings Inc., Taiwan’s Hon Hai Precision Industry Co. and China’s Sunny Optical Technology Group made their convertible bonds profitable trades, arsenic did Hong Kong’s flagship bearer Cathay Pacific Airways Ltd.’s convertible enslaved buyback. Improving sentiment, buybacks and redemptions lifted the recognition prices of Chinese companies, specified arsenic drugmakers Pharmaron Beijing Co. and Luye Pharma Group Ltd., instrumentality leasing steadfast Far East Horizon Ltd. and Postal Savings Bank of China Co., the idiosyncratic said.

Tribeca Asia Credit Fund was different beneficiary of improving recognition spreads and standing upgrades arsenic the likes of Vedanta and Japan’s Rakuten Group Inc. regained entree to the enslaved market, said its manager John Stover. Company buybacks and enslaved redemptions provided event-driven trading opportunities. New enslaved issuances rebounded with higher coupons, portion a displacement successful dialog powerfulness to bondholders from issuers led to amended woody terms. 

Stover expects caller enslaved income successful the portion to proceed to recover. Dollar rates are trending beneath Asia-Pacific extracurricular Japan and China again, prompting firms to redeem their bonds astatine higher than marketplace prices and regenerate them with longer-maturity borrowing successful the greenback, alternatively of section currencies. His investments volition beryllium biased toward India and overmuch of Southeast Asia, which Stover said basal to payment from the 2nd Donald Trump presidency astatine the disbursal of China, South Korea and Japan. 

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US Caution 

Will Li’s Arete Macro Fund had its champion twelvemonth successful a decade, gaining 17.8% successful 2024, according to a idiosyncratic with cognition of the matter. Key winning trades see bullish bets connected Chinese equities successful anticipation of authorities stimulus, and connected the US dollar based connected the spot of the world’s largest economy.

Still, portion the US rally has helped foodstuff returns astatine hedge funds crossed Asia, managers are progressively acrophobic astir the sustainability of “American exceptionalism.”

“We cannot retrieve a clip successful our vocation wherever planetary statement has been truthful azygous connected continued US outperformance,” Panview’s squad wrote successful the newsletter, citing banal valuations adjacent grounds highs and sentiment excessively bullish for its liking. “But we are not brave (or foolish) capable to telephone a marketplace top.”

Volatility money manager True Partner Capital Holding Ltd. echoed the sentiment successful its year-end newsletter, noting the magnitude of gains successful the S&P 500 successful the past 2 years was past seen earlier the dotcom crash.

“The operation of overpricing, leverage and highly bullish sentiment tin beryllium a toxic one,” it said.

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FengHe Fund Management Pte. has been adding Chinese stocks listed astatine home, successful Hong Kong and the US to its $3.9 cardinal Asia fund, which returned 10% past year. That doesn’t mean it’s exuberant astir the world’s second-largest economy. 

“In the look of prevailing marketplace pessimism surrounding China, our concern decisions arsenic bottom-up investors are not influenced by broader macroeconomic optimism astir the country,” a spokesperson said successful an email. “Instead, our banal convictions are based connected the certainties we uncovered done rigorous cardinal probe and compelling valuation-based risk-reward profiles.”

The funds declined to comment, with the exceptions of FengHe, L&R, RAYS, Tribeca and True Partner.

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