Amid a surge in Chinese equities last month, Asia-based hedge funds have managed to outperform their global counterparts, following three years of underperformance.
Funds such as Quantedge Capital Pte., Ocean Arete Ltd. by Will Li, and Monolith Management led by Timothy Wang, reaped the rewards of their investments in China, as the country implemented more aggressive stimulus measures.
The robust September performance, with gains of nearly 5%, propelled Asia hedge funds to a 9.7% return for the year’s first nine months, surpassing the 8.1% average increase recorded by global peers, according to Eurekahedge Pte indexes. Hedge funds in Asia delivered a remarkable 4.9% in gains in September, in contrast to the global average of 1.5%.
The Federal Reserve’s recent half-point rate cut created space for China to roll out a series of easing measures without concerns about currency devaluation. September saw the MSCI China Index surge by 23%, the most significant jump in almost two years, as Beijing adjusted banks’ reserve requirements and permitted millions of households to negotiate lower mortgage rates. This rally pushed the China gauge’s return for the first nine months to approximately 25%.
Commenting on the scenario, Timothy Wang, the founder of Monolith Management, expressed anticipation of an economic policy shift, particularly in the wake of the Fed’s rate cut. He noted that China had been largely underweighted among investors.