Europe: The European industry goes back to basics

Thu Apr 23, 2009

Nick Evans, editor, EuroHedge

There are no two ways about it: 2008 was a brutal year for hedge funds, as it was for everyone involved in the financial industry.

Performance was generally poor – although not half as poor as that of equity markets, which fell by around 40% as the gathering credit crisis erupted into a financial and economic collapse of truly mind-blowing proportions.

Redemptions snowballed as investors – faced with huge wealth destruction across the board – pulled back from hedge funds, triggering a massive round of deleveraging and unwinding of positions into increasingly illiquid and wildly volatile markets.

Knee-jerk political and regulatory interventions, such as the worldwide bans on short-selling of financial stocks, further undermined the proper two-way functioning of whole sections of the financial market.

And entire areas of the global markets seized up altogether as the financial system teetered on the brink of systemic collapse...

ISSN: 2151-1845 / CDC10004H

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