By Aradhna Dayal
The 2011 AsiaHedge
Forum could not have had taken place at a more eventful moment,
coming days after the disastrous Japan earthquake and the
resulting tsumani that swept not just through the physical land
but also the global financial markets.
Scrambling to re-confirm delegates/speakers in the wake of
these events, I couldn’t help but marvel at the
remarkable spirit of resilience – and indeed
old-fashioned heroism and revival – that is the
trademark of Asia.
Back in Hong Kong at the AsiaHedge Forum, a record number of
delegates poured in, including all our Japan-focused speakers
(many in the midst of temporarily relocating families and staff
from Tokyo and receiving generous hosting offers from managers
and investors alike in Hong Kong and Singapore). Despite an
underlying sense of loss and grief for the people in Japan, a
large chunk of discussions centred around the once-in-lifetime
investment and rebuilding opportunities unleashed by the
Managers and investors alike were of the view that some
sterling new investment strategies could come out of the sharp
plunge in the Nikkei and stocks in crippled sectors such as
autos and food exports, as well as in areas such as new energy
solutions and construction. And at the macro level, the
calamity could present the Japanese leadership – mired
for so long in controversy and inertia – with an
opportunity to take concrete steps to revive the economy, and
for the Japanese people to rally behind them for a change in a
show of solidarity.
For a country that completely reconstructed itself after the
Second World War and the Hiroshima/Nagasaki atomic bombing,
this could well prove to be a new turning point and a way to
emerge out of its decade-long deflation. In other words, a
chance to rise from the ashes like the mythical phoenix
– and be born anew.
Global investor sentiment already seems to be supporting
this view. A record $2.3 billion flooded into Japan-dedicated
ETFs in March alone – one of the largest inflows into
the single-country ETF space in a single month. There is also
anecdotal evidence of inflows into several large and
long-established Japan-focused hedge funds as well, although
there are also reports of outflows.
As a classic example of hedge fund resilience, several
Japan-focused funds generated positive returns through the
chaos in March. These included Whitney Japan Fund (5.14%),
Symphony’s SPF Value Realisation (2.05%), FPP
Japan Fund (5.8%), Bayview’s New Alphex (2.1%),
Rockhampton (1.67%) and Yaraka (1.81%).
This is no mean feat and it would not be surprising if these
managers were to attract solid new assets on the back of this
performance. And let us not underestimate the importance of
this: maintaining net new inflows in this segment is critical
for the overall growth of the Asian hedge fund industry.
At $22.8 billion, Japan is the second largest strategy in
the regional hedge fund space. As the only fully developed and
deep financial market in Asia, it has long remained a must-have
destination for global allocators looking at Asian
While on the subject of comebacks, two other original poster
boys of the Asian hedge fund industry are starting their second
innings. Michael Nock, the former founder of Hong
Kong’s Doric’s Capital, has
re-emerged with the Aardwolf Fund – while Steve
Diggle’s hedge fund and alternative investments
platform Vulpes went live at the start of April.
Both ventures are being watched with great interest within
the investor community, given the founders’
long-standing experience through the various economic and
market cycles in Asia, and we bring you an exclusive on both of
these comebacks in this issue of AsiaHedge.
Another key issue that will require significant re-wiring of
Asian funds’ compliance, capital-raising and
operational efforts is the looming deadline for registration
with the US SEC. We analyse the implications for Asian managers
in our Regulation section this month.
Finally, we bring you complete coverage of the AsiaHedge
Forum 2011, where top economists, managers, investors,
regulators and legal/operations experts debated the best
strategies to harness the growth of the high-octane market that