Hedge funds investing in China lost 7.4% in first quarter

[LONDON] Hedge funds investing in China lost an average of 7.4 per cent in the first quarter of 2016, the fallout of a turbulent three months for the world's second largest economy, all but wiping out all the previous year's profits, data from eVestment showed.

A slowing of China's growth along with pressure on its stock markets, corporate borrowers and the yuan currency sent a shockwave through global financial markets in January.

Public media in China lashed out at hedge fund "speculators"and regulators took a raft of measures to prevent the aggressive shorting of local markets and offshore trading of the yuan.

The result has been a calming of volatility in the past six weeks and what a number of bankers describe as a "capitulation"by the largely US-based funds who bet most heavily on a sharp devaluation of the yuan.

The regular eVestment figures give no indication of what assets funds lost money on, but showed those investing in China lagged returns of 16.9 per cent and 18 per cent for those investing in fellow emerging market leaders Brazil and Russia.

Hedge funds investing in China made 7.5 per cent over the whole of last year.

REUTERS