HONG KONG: Singapore-based Asia Genesis Asset Management is to liquidate its hedge fund after suffering “unprecedented and significant losses” following failed bets on China and Japan.
The Asia Genesis Macro Fund fell 18.8% in the first week of January, chief investment officer Chua Soon Hock said in a letter to investors seen by Reuters. He said he decided to close the fund to prevent further losses and return funds.
The fund was founded in 2020 by hedge fund veteran Chua and manages about $300 million.
Asia Genesis did not respond to a request for comment. Officials confirmed the decision.
The closures come amid an unprecedented inventory collapse in China and sustained stock market gains in Japan.
“We made a big mistake with the recent sharp move in opposite directions by Nikkei and Hong Kong,” Chua said in the letter. “I reached a point where I lost confidence as a trader.”
The fund increased its long positions in Hong Kong and China, and took a short position in Japan. This is based on predictions that China will outperform Japan this year after being sold off for the past three years, while Japan will underperform after gaining 30% last year. .
Mr Chua said the fund’s woes were exacerbated by the failure of China to implement any major economic stimulus measures, including interest rate cuts. China kept interest rates unchanged on Monday.
Chua said he was disappointed that “China’s policymakers’ inconsistency in combating deflation continues to undermine market confidence and lead to a prolonged bear market.”
According to the Asia Genesis website, the Asia Genesis Macro Fund had positive returns in 2020, 2021 and 2022. The stock rose 6.5% in 2023 through November, according to people familiar with the performance.
Mr. Chua previously ran the Japan Macro Fund, which had an annual return of 18.7% from 2000 to 2009.
Many long-term China bulls have been caught off guard by the long-term decline in the stock market.
In a Linkedin post in December, Chua said 2024 will be the beginning of a multi-year bull market in Chinese stocks.
However, after a disastrous 2023, the Chinese market has had a terrible start to 2024, with the blue-chip CSI300 index sinking to near its lowest point in five years, while Hong Kong’s Hang Seng Index has rebounded, hitting its lowest since 2022. ing.
The Hang Seng Index is down more than 10% since the beginning of the year, while Japan’s Nikkei Stock Average is up 9%.
Spotty economic growth and a renewed slump in home sales have made investors increasingly determined to stay away from the Chinese market.