By Summer Zhen

HONG KONG (Reuters) – Asian hedge funds delivered their strongest returns in 15 years last year, taking advantage of market volatility, winners in China’s faltering economy and artificial intelligence opportunities. intelligence (AI).

The HFRI Asia with Japan Index, which tracks hedge funds that invest mainly in the region, rose 12.1% last year – the best annual growth since 2009. HFR is one of the largest platforms in world hedge fund data.

2024 is an easy year for most investors amid capital outflows from the region to stronger dollar assets, deflation risks in China, and a big break in trades funded in yen.

As hedge funds navigate the turmoil of the past year, investors expect business in Asia to remain challenging in 2025 amid geopolitical uncertainty and Donald Trump’s second US presidency.

Several China-focused funds beat China’s benchmark indices by picking winners on the country’s economic turnaround, sources inside the funds and investors told Reuters.

Hong Kong-based Keywise Capital, which manages $2 billion, sees its flagship Mega Trend strategy rising 51% in 2024, thanks to its bets on Gen Z consumption such as retailer Miniso and companies in power supply such as China Yangtze Power, which benefits from AI. need.

Penguin’s technology-focused development fund book Keywise is a 71% return.

Fang Zheng, chief investment officer of Keywise, said that AI, businesses that appeal to young consumers, and clean energy will be important sustainable trends and he expects that “AI will respond to applications of emotional intelligence (EQ) in 2025.”

First Beijing, a China-focused hedge fund, gained 42% last year, offset by its stakes in Meituan, Atour Lifestyle and Full Truck Alliance, according to a source familiar with the performance.

Funds that took advantage of the brief window of opportunity after China announced its stimulus package in September had decent returns, according to Timothy Moe, chief equity strategist in the Asia Pacific region at Goldman Sachs.

“It’s very clear that hedge funds are very quick and easy to take advantage of rallies in China,” Moe said, noting that such funds have increased their positions in China on the back of the stimulus rally. , and reduced it when the market peaked in early October.

Basic long-short funds in Asia posted an average gain of 14.1%, higher than their peers in the US and Europe, which rose 13.2% and 4.6% respectively, according to the Goldman Sachs prime brokerage estimate.

Asia-based multi-strategy funds also had a good year with Dymon Asia, Pinpoint and Ovata Capital delivering double-digit returns.

The Singularity Tech Fund, run by Hong Kong’s $1.3 billion CloudAlpha Capital Management, has jumped more than 70% in the past year, with positions in semiconductors and datacentre infrastructure delivering profitable returns, according to the firm.

Panview Capital’s flagship pan-Asia fund jumped 41% in 2024 helped by large bets on Japan, according to an investor source.

Panview and First Beijing did not respond to a Reuters request for comments.

Analysts say China remains a difficult market for global allocators, despite impressive returns last year.

“We see more interest in either Asian multi-strategy funds or Japanese funds as they are seen to be operating in a more predictable regulatory and political environment,” said Patrick Ghali, managing partner of Sussex Partners.

Hedge fund performance:

ASIA HEDGE FUNDS STRATEGY 2024

PERFORMANCE

*Keywise Mega Trend Equity height only 51%

First Beijing Equity is only 42% long

*Yunqi Capital – Yunqi Path Equity up 29%

Short funds

WT China Fund Equity up 34%

NOTES

Golden Pine Equity up 25%

NOTES

Golden Nest Equity up 13%

NOTES

PinPoint China Fund Equity up 20%

NOTES

Greenwoods Focused Equity up 36%

Opportunity Fund short

*Keywise Penguin Development Equity’s height is only 72%

*CloudAlpha Tech Fund Equity is up 80%

NOTES

*CloudAlpha – Singularity Equity up 72%

Brief Tech Fund

Panview Equity up 41%

NOTES

Keystone Equity is up 23%

short, low net

Dymon Asia Multistrategy 17%

PinPoint Multi Strategy Multistrategy 12%

Ovata Multistrategy 13%

Sources: Investors and funds

*For Keywise, Yunqi and CloudAlpha, performance refers to gross returns