Gwyneth Roberts, editor, AfricaHedge
The global credit crunch and ensuing financial crisis revealed that many frontier markets in Africa and the Middle East proved decidedly correlated with the rest of the world in 2008, debunking a widely held investment thesis, as investors lost their appetite for risk.
Managers in the nascent sub-Saharan and MENA markets were hit hard amid a dearth of shorting instruments and extreme illiquidity. The South African hedge fund industry proved resilient, however, in a year in which the Johannesburg All-Share Index dropped 23%. Protected by their size and by exchange controls, the country’s banks were less affected by the liquidity crunch than their global peers. In addition, no restraints were imposed on shorting in a market where naked short sales have long been disallowed, leaving investment managers with a full arsenal to battle extreme volatility.
For the calendar year, the AfricaHedge Single Manager Composite...