China-focused hedge funds cede top spot to Japan peers

London

CHINA-focused hedge funds suffered record losses in the past three months and were overtaken by their Japan-themed peers as this year's best performers, leaving them at risk of a surge in redemptions.

China hedge funds, which collectively manage US$21.5 billion in assets, posted a 17.9 per cent loss for June to August, the worst ever for a three-month period, amid a rout in Chinese stock markets, data from hedge fund tracker Eurekahedge shows.

Some managers were caught out by the extent of the selloff in China, re-entering the market prematurely. "Many managers thought the collapse had nearly ended when it was just midway through and they increased exposure significantly then hammered," said Theodore Qi Shou, chief investment officer of Hong Kong-bas…