Some good things never last.
From consistently outperforming the rest of the world since March this year, China-focused hedge funds were the worst performer in June as the equities market in the mainland started to tumble after the government tightened rules on margin financing, and as the Greek debt crisis that culminated at Sunday’s referendum began to unravel.
The China hedge fund index tracked by HFR fell 3.52% in June, its worst monthly performance since June 2013 when it dropped 6%. The decline was steeper versus the overall HFRI Fund Weighted Composite Index, which shed 1.3% and HFRI Asia index with Japan, which slipped 1.9% and the overall emerging markets index’s 1.7% fall.
It was also the biggest monthly fall for the overall HFRI Fund Weighted Composite Index since June 2013, HFR said in a statement.
“Hedge funds posted declines in June as Chinese equities fell sharply and uncertainty over the outcome of the Greek referendum contributed to losses,” HFR said.
All of HFR’s emerging market indices (Asia ex-Japan, China, India, Latin America, among others), as well as those for regional (Asia, North America, Western/Pan Europe) and major markets were in the red last month.
For the first six months of the year, China-focused hedgies gained 18.94%, the best performer among all the HFR indices, buoyed by its strong showing in the previous months.
Before the rout middle of last month, Chinese shares peaked at six-year highs, fueling fears that the market was in a bubble and ready to burst. Since its June 12 peak, the Shanghai Composite Index lost more than 30%, even after the Chinese government introduced a string of economic and market-boosting measures.
Photo credit: Tambako The Jaguar