Turning Japanese.
That’s how some Asia-focused hedge funds are doing, shifting to Japanese firms as worries about a correction in the Chinese equities markets are rising, according to Bloomberg. Japan’s resolve to boost corporate governance and its companies’ focus on shareholder value are what’s driving hedge funds to Japanese firms.
Among their picks are Japanese energy producers, as well as manufacturers of semiconductor parts and foods and beverages, Bloomberg said, citing fund managers who attended the annual Sohn Conference in Hong Kong last week.
Chinese shares have been rallying since the start of the second quarter, and last week, key indices climbed new seven-year peaks, though volatility has also risen. Optimism that the government will take more steps to re-energize the economy, while giving foreign investors more access to its capital market, fueled the rally in equities.
According to the latest HFR data, its China index gained 22% since the start of the year through May 15, outperforming the rest of the world, while its Japan index returned nearly 10%. But that may change soon should hedge funds make good their intention of investing more in Japan.
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