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Asia’s hedge fund market was slammed in October as performance losses and fund outflows took their toll. According to data compiled by AsiaHedge, overall fund outflows totaled -6.3% for Asia’s hedge fund managers – a combination of -1.6% fund outflows and -4.7% performance figures.

The October effect, a theory that stocks tend to decline during the month of October, played out this year as the Nasdaq dropped 9% in the month – the biggest monthly drop for the Nasdaq since November 2008. Meanwhile, the broader S&P 500 lost nearly 7%.

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Unsurprisingly, October’s biggest losers were US dollar-denominated global equities managers, who suffered outflows of -11.8% and returns of -3.2%. Australian dollar-denominated funds also struggled with average returns in October of -6.4% and fund flows of -1.8%.

Greater China’s stock indices fared no better as Hong Kong’s Hang Seng tumbled 10%, while China’s Shanghai Composite lost 8% in October. Again, the ongoing US/China trade conflict was blamed as in early October, the IMF downgraded its 2019 outlook for both the US and China, citing the deepening trade war between the world’s two largest economies.

Yet, there is an expected meeting between President Donald Trump and President Xi Jinping at the G-20 summit at the end of November, which many hope will change the current rhetoric between the superpowers.

Despite market losses, Chinese equities strategies remained relatively resilient as performance was down -3.5%, while fund flows were positive at 0.5%. However, pan-Asia strategies were impacted more. Asian Equity ex-Japan USD fund managers had total outflows of 10.7% and those with Japan exposure suffered outflows of 7.3%.

After months of heavy inflows but poor performance Indian equity strategies had a relatively benign month on both fronts. Fund flows were up 0.5% and performance stood at -3.0%. This came despite an ongoing market correction which saw Sensex suffer considerable losses.

‘October effect’ plays out for Asia’s hedge fund flows on AsiaHedge.


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