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Reuters - Emerging stocks and bonds slid in a panic sell-off on Wednesday as hedge funds dashed to unwind positions, but Hungary’s central bank tried to throttle a slide in its currency with a three-percentage point rate rise.
The banking crisis that started in developed markets is leading to steep falls in emerging markets, as investors are forced to retrench, analysts and traders say.
"There is a need for hedge funds to withdraw from emerging markets to cover redemptions that are occurring, it is a reversal of the carry trade that is being unwound at a very rapid rate," said Neil Dougall, chief emerging markets economist at Dresdner Kleinwort.
USA Today - Given the stock market’s wretched performance this year, your current retirement plan may involve a modest part-time job, such as woodworking or forgery.
Before you take up a life of crime, however, remember that really rotten markets sometimes uncover opportunities. In fact, the worse the market, the more bargains you can find. And right now, you can buy stocks and bonds of the nation’s best-run and most profitable businesses at astoundingly low prices. What’s more, you can collect dividends and interest while you wait for the economy to recover and for other investors to regain their senses.
First, and let’s not whitewash things here, the current market has all the appeal of a weekend in the local viper pit. The Dow Jones industrial average plunged 679 points on Thursday alone; it has shed 5,585 points, or 39%, in the past 12 months.
Bloomberg - Energy Capital Management and Nordic Commodity Funds AB’s hedge funds are outperforming the competition in European energy markets, where power prices fell as much as 17 percent last month from a record.
Energy Capital’s MMT fund returned 19.2 percent through July, according to a letter to investors, the best result in a Bloomberg survey of 11 funds in Europe’s electricity, coal, natural-gas and emissions markets. Alfakraft AB’s Alfa Energy Fund posted the biggest drop, at 17.9 percent, according to its Web site.
The plunge in power prices and related commodities since early July ended a four-year surge in electricity costs that enabled funds to provide better returns than stocks and bonds. Coal costs, which affect European power markets, more than doubled in the first half, before sliding 13 percent in July.
West Palm Beach (HedgeCo.Net)- A recent Bank of America Survey of high net worth Americans indicates that US investors understand the risk and rewards of hedge fund investments. Many expressed greater satisfaction over the last 12 months with their holdings in alternatives, including hedge funds, venture capital, real estate and private equity, than their more traditional investments, including stocks and bonds.
Surveying more than 400 high net worth investors with greater than $3 million in investable assets, 267 held investments in alternatives overall, including 92 who held investments in hedge funds or hedge funds of funds. Nearly one-third (32%) of the data collected focused on the attitudes of individuals with investable assets of $10 million or more.
The findings also indicated a positive relationship between satisfaction with alternative investments and the length of time the investments were held. Investors with 10 or more years of experience in alternatives were almost twice as likely as those with fewer than 10 years of experience to be "extremely satisfied” with their total portfolio since their initial investment.
Negative stories published about hedge funds appear not to have deterred experienced hedge fund investors, according to the survey’s findings. When asked if negative publicity about hedge funds impacted their investment decisions, 44 percent of those invested in hedge fund vehicles said no and only 20 percent said yes.
"Our study demonstrates that, despite the portrayal of hedge fund investors as risk-takers investing in aggressive managers," David Bailin, president of Bank of America Alternative Investment Solutions, said, "Many high net worth investors have a realistic understanding of the risks associated with their holdings and realize that large alternatives managers are institutional in their investment approach and the quality of their investment professionals.”
New York (HedgeCo.Net) - Donald Trump Jr. has plans to set up a $1 billion hedge fund that will amass property in India and capitalize on the nation’s economic growth, according to a report published on Bloomberg.com.
"The fund will be for acquisitions of real estate in the high end and across the spectrum,” said Trump. "I see a lot of opportunities. We’ll start it off relatively small and grow it as we get more familiar with the Indian market.”
Trump Organization Inc. will focus on the city of Mumbai, where they are planning the development of a hotel/residential project. Mumbai is the home of many wealthy Indians and is also the country’s biggest trading center for stocks and bonds.
"Our entry has to be in Mumbai and that’s where everything is going on right now in terms of the high-end real estate,” Trump added. "That’s the place where one is going to achieve the highest prices per square foot. It sets the tone for all of the other future developments.”
While the U.S. hasn’t fared so well, India’s real estate prices has experienced steady climbs for five straight years amidst rising incomes.
Trump may go in on the deal with other investors including an Indian family, though he didn’t get specifics as how he would go about raising capital.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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BEIJING (Reuters) - Bank of Communications Schroders Fund Management Co is aiming to raise up to 1 billion yuan for its first overseas fund later this month, despite sliding global financial markets, two company sources said.
Poor market conditions have sapped interest in funds launched recently under China’s Qualified Domestic Institutional Investor QDII.L scheme, which offers residents the chance to diversify their portfolios by buying global stocks and bonds.
In May, Yinhua Fund Management Co raised just 417 million yuan for China’s seventh QDII fund from a fund-management firm, far below its $2 billion target.
One of the sources said Bank of Communications Schroders was under pressure from the securities regulator to start marketing its first fund if it wanted to secure permission to launch others later.