As the hedge fund landscape continues to evolve with dynamic strategies, expanding asset classes, and the emergence of new funds, it becomes imperative to delve into the prevailing trends that shape this domain. With the onset of the new year, we have examined the anticipated changes and recent developments that unfolded in the last two weeks of January 2024. Here’s an overview of the key events influencing the hedge fund industry.
European Regulators Monitor Risky Hedge Funds
The European Securities and Markets Authority (ESMA) is monitoring a group of hedge funds with high leverage in the mortgage-backed note market. The group accounts for up to 15% of trading in the market and has a median leverage ratio of over 500%. While most funds have sufficient cash levels to cover potential margin calls, ESMA is concerned about the potential for the funds to destabilize the market if they were to sell off their positions.
ESMA is also monitoring the exposure of European hedge funds to Treasury futures, but has not found any evidence of an increase in exposure last year. Overall, ESMA is concerned about the risk posed by highly leveraged hedge funds and is taking steps to monitor their activities.
This information is based on the article analysed and reported by ThePlatform’s analysts team: Hedge Funds With 2,000% Leverage Catch EU Watchdog’s Eye – Bloomberg.
SEC Postpones Vote on Dealer Registration for HFs and Prop Firms
Securities and Exchange Commission (SEC) has postponed a vote on new regulations that would require hedge funds and proprietary trading firms to register as dealers. The new rule was originally scheduled to be voted on on January 31, but has now been moved to February 6th. The SEC has said that the new rule is necessary because high-frequency trading firms make up a significant portion of daily transactions in the US Treasuries market and should therefore be regulated as dealers. However, industry groups have expressed concerns that the new rule could force them to either rethink their trading strategies or exit the cash Treasuries market completely.
This information is based on the article analysed and reported by ThePlatform’s analysts team: SEC delays hedge fund dealer registration rule vote – Hedgeweek.
Ex-Goldman MD Jamie Goodman Launches Asia Hedge Fund with Millennium Backing
Jamie Goodman, a former Managing Director at Goldman Sachs, is launching a new Asia hedge fund firm with backing from Millennium Management. Goodman will focus on APAC equity capital market deals, including IPOs, follow-on share sales, and block trades. His new firm will manage money exclusively for Millennium for a period of time. Goodman previously worked at Maven Investment Partners in Hong Kong and Goldman Sachs.
This information is based on the article analysed and reported by ThePlatform’s analysts team: Goldman Sachs veteran secures Millennium backing for new Asia hedge fund – Hedgeweek.
Hedge Funds Return to China After Years of Selling
Hedge funds have been increasing their purchases of Chinese stocks in recent weeks. This is the fastest pace of buying in five years and is a reversal of a recent trend of selling Chinese stocks. The surge in interest is due to Beijing’s efforts to restore confidence in the Chinese economy and is being fueled by purchases of American Depository Receipts (ADRs), mainland A-shares, and H-shares. However, overall positioning in Chinese equities remains at five-year lows.
This information is based on the article analysed and reported by ThePlatform’s analysts team: Hedge funds buy Chinese stocks at fastest rate in five years – Hedgeweek.
Hedge Fund Managers Bet on Copper Bull Market
Numerous hedge fund managers are anticipating a significant increase in copper prices this year, due to concerns about a supply deficit. Terra Capital, Tribeca Investment Partners, and Anaconda Invest are just a few of the firms that have expressed optimism about the metal’s prospects. They believe that a series of supply setbacks, including problems at key copper mines, have altered the market dynamic from one of excess supply to one of deficit.
As a result, they see significant upside potential in copper prices, with some predicting gains of up to 50% by the end of 2024. These bullish bets are being fueled by expectations of increased demand for copper in the green energy sector. While supply disruptions have created opportunities for miners with existing operations, the lack of investment in new supply is a concern for some manufacturers.
However, investors are confident that overall, the supply dynamics are favorable for copper. Overall, the outlook for copper appears to be positive, with a potential for a sustained bull market in the coming years.
This information is based on the article analysed and reported by ThePlatform’s analysts team: Hedge Funds React to Supply Shocks With Bold Bets on Copper – Bloomberg.
Dymon Asia Capital Adjusts Fee Structure to Stay Competitive
Hedge fund Dymon Asia Capital is introducing a new share class with a hurdle rate, meaning it will not charge performance fees until investors earn at least a 5% return. This is a move to attract investors in a high-rate environment, where cash provides decent returns. Dymon aims to generate after-fee returns of 10% to 15%, and it has already received enough interest from clients to fill its $1 billion fundraising target.
This information is based on the article analysed and reported by ThePlatform’s analysts team: Hedge Fund Dymon Waives Performance Fees Until Target Met – Bloomberg.
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