China & India Lead Resurgence in Asia Focused Funds
During the past four weeks, BHA analysts have seen investor interest in Asian hedge funds increase significantly. Investors have cited three main reasons why their interest has amplified during this current economic environment. First, when compared with other regions, Asia’s regional interest rates are considerably lower. Second, the Central Bank of China has reported record loan growth. In March of this year, new loans hit a record high of 1.89 trillion Yuan ($276.6 billion). For investors, this is a sign that the economic conditions in Asia, and specifically China, may be poised to offer great opportunities. Finally, current policy actions are aimed at maintaining strong liquidity conditions and motivating domestic demand. In short, Asian economies are continuing to grow, especially the region’s two largest, China and India.
A family office based in Switzerland has realigned its entire hedge fund portfolio to concentrate solely on opportunities within Asia, specifically long/short equity funds focused on Indian equities, as well as convertible arbitrage funds that are taking advantage of the current economic environment. The firm feels that Asia is poised to present very lucrative opportunities over the next few quarters.
A large investment consultant based in the United States also sees great opportunities in Asia. The firm is researching new Asian funds to add to its portfolio by the fourth quarter, specifically emerging managers that have a new perspective on the Asian markets.
While most countries are experiencing very slow or stagnant growth if not continued economic decline, Asia has emerged as a strong and resilient region. Hedge fund investors have noticed and are willing to bet on it.