Number of Chinese Investment Hedge Funds Declines for the First Time in 10 Years

Bloomberg "Stock-Focused Funds Post Losses for Second Consecutive Year"

As foreign investors' interest in China wanes, reports have emerged that hedge funds investing in China are incurring losses.

Bloomberg News reported on the 14th (local time), citing data from information provider Preqin, that some investors are lamenting the end of the era of foreign hedge funds targeting China.

According to Preqin data, the number of active hedge funds focused on China has decreased for the first time since 2012. Only five new funds were launched by June this year, while another 18 funds were liquidated.

In the case of Dantai Capital, after concluding that their investment strategy no longer works in the current market environment, they liquidated their flagship product, the 'Greater China' hedge fund, this year.

Bloomberg reported that this contraction signifies a major change for offshore hedge funds targeting China, which accounted for nearly half of new funds in Asia by riding the upward trend of the Chinese economy and capital markets until 2021.

It is analyzed that escalating geopolitical tensions with the United States, along with crackdowns by Chinese authorities on some private companies in sectors such as private education and e-commerce, have led to weakened returns and diminished global investors' willingness to invest in Chinese assets.

According to data from Eurekahedge, a hedge fund analytics firm, China-focused hedge funds concentrating on equities are facing 'unprecedented' losses for two consecutive years. More than two-thirds of these funds experienced losses last year, with 36% suffering losses exceeding one-fifth. Preqin reported that 62% of China funds failed to generate profits in the first half of this year.