Goldman Sachs estimates that China-focused hedge funds had their best weekly performance on record. A rally in stocks that fueled China’s blue-chip CSI 300 index to a record 25% jump in five days last week has made Asian equity hedge funds among the top performers globally for the year so far. Hong Kong’s Tryta Capital returned 44% last month, taking its January-September performance to 56%. The $770 million China-focused fund had long-term investments in data centers, internet giants, e-commerce and travel firms, and those investments are paying off. “Great companies were trading at deeply discounted valuations,” Trita Capital chief investment officer Sean Ho said in a September investor letter. Before fees, Yunqi Capital’s China fund gained 26% in September. The fund said its bets on US-listed Chinese internet and fintech companies such as Lufax Holdings and Qifu Technology have paid off. The fund also picked companies that were increasing buybacks and dividend payouts. The bounce in Chinese stocks comes after a three-year slide. Authorities launched their biggest post-pandemic stimulus last week, including interest rate cuts and a $114 billion war chest to boost stock prices. The MSCI China index rose 24% in September, its biggest monthly gain since November 2022. The turnaround is a relief for Chinese funds that have been suffering from the sluggish economy and geopolitical tensions caused by the COVID-19 pandemic. Analysts believe that if the boom continues and the economy improves, foreign money will return to China’s funds. Goldman Sachs estimates that China-focused stock-picking hedge funds returned 6% between September 23-27, their best weekly performance on record. So far this year, broad Asian equity hedge funds have gained 12%, leading the pace of gains globally. Funds in Asia underperformed last month with low net long positions on China. Singapore-based Keystone Investors, which pursues a low net strategy with long and short bets on about 100 companies, lost 4.8% for September, cutting its year-to-date gain to 13.2%, according to a source familiar with its performance. . Keystone declined to comment. Financial analytics firm S3 Partners estimated that short-sellers in offshore Chinese stocks may have lost $6.9 billion in the last two weeks of September. Steven Luke, chief executive of Fountaincap Research and Investments, said the stimulus package is comparable to the 4 trillion yuan program that China unveiled during the 2008 global financial crisis, which started a multi-year rally in stocks. Fountaincap’s long-only China fund gained 19% last month. Don Steinbrugh, founder of Edgecroft Partners, a hedge fund consulting firm, said hedge fund strategies focused on China will return over time, depending on how and when the Chinese government stabilizes the property market and economy. “However, we do not expect this increase in demand until early/mid 2025,” he said. Hedge Funds Performance: Asia Hedge Funds September Year-To-Date Trita 43.7% 55.7% *Yunky Capital – Yunky Path Fund 26.3% 32.1% WT China Fund 1.7% 20.8% Fenghe Asia 1.4% 13.8% 13.8% China Multi Point. Strategy 0.3% 6.2% CloudAlpha Tech Fund 19.7% 36.8% CloudAlpha – Isolation Tech 7.3% 38.9% Fund Keystone -4.8% 13.2% IvyRock China Focus 18% 17.2% FountainCap% 13%% 13%. Total Fees
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