Asia Hedge Funds See Positive Returns in Q1 Due to Japan Rally and China’s Recovery

Asia-focused hedge funds have had a strong start to 2024, with a successful first quarter driven by a rally in Japanese stocks, a turnaround in Chinese equities, and a surge in artificial intelligence (AI) stocks. According to data from Eurekahedge, hedge funds using an Asian equities long/short strategy saw a 2.9% increase in the first quarter.

Multi-strategy hedge funds in Asia that invest in various asset classes posted a 3.7% return, showcasing the region’s overall positive performance. Pan-Asia funds with exposure to Japan also saw significant gains, with funds like Panview Asian Equity Fund and FengHe Group reporting impressive returns.

The Nikkei share index in Japan hit a record high last month, rising 21% in the first quarter alone. This growth was attributed to signs of economic recovery and improved corporate governance in the country. Similarly, Chinese stocks stabilized after years of losses, with the MSCI China index bouncing back 10% since January.

Hedge funds that focused on procyclical sectors and AI-related trades reaped the benefits of these market trends. Funds like First Beijing and Grand Alliance Asset Management’s Sino Vision Market Neutral Fund reported gains from investments in companies like Meituan and AI supply chain companies.

While many hedge funds saw positive returns, China’s quantitative hedge funds faced challenges due to regulatory crackdowns and trading restrictions. Funds like Jupiter Tactical Trading Fund and Ubiquant recorded double-digit losses in the first quarter.

Overall, the hedge fund industry in Asia has shown resilience and adaptability in navigating the volatile market conditions, with some funds outperforming expectations and others facing setbacks.