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Reuters – Foreign exchange trading volume in Japan has fallen 16 percent this year after many hedge funds closed out investments during the global financial crisis, and Tokyo’s turnover in spot trading now lags behind Singapore.
But steady turnover in FX swaps has helped Tokyo remain ahead of Singapore, its key rival as Asia’s dominant FX trading hub, in overall foreign exchange product trading, data on traditional FX instruments from the Bank of Japan showed.
Bloomberg – It was a crisp autumn day in November 2005 when hedge fund manager John Ho entered the half- century-old Electric Power Development Co.’s headquarters in Tokyo, betting that Japan’s corporate attitudes were ripe for change.
Ho, then director of Asia-Pacific investments at the Children’s Investment Fund Management UK LLP, also known as TCI, was ushered into a conference room with a worn carpet to meet with Masayoshi Kitamura, then executive vice president of the utility. The visitor, who was offered a bottle of water, told Kitamura he wanted to learn more about the company’s plans for growth.
Bloomberg – Frederic Eechaute, a former senior analyst at DKR Oasis Management Co. LP, will start a Japan- focused equity hedge fund that trades stocks using its own analyst database.
Eechaute, who will split his time between Tokyo and Sydney, along with Stephen Good, who formerly worked in the Japanese equity sales department at Mizuho Securities Co., set up Instinct Capital in June to run the new fund that may open as early as September. The fund will employ a so-called long-short strategy, betting on rising and falling stocks, and have a maximum capacity of 30 billion yen ($319 million).
Bloomberg – Meiji Yasuda Life Insurance Co., with 23 trillion yen ($244 billion) in assets, said it will cut its investments in hedge funds this year as it switches to investments with steadier returns.
Japan’s third-largest life insurer will reduce its allocation to the industry by “several tens of billions of yen,” from 64.6 billion yen at the end of last fiscal year through March 31, said Shinji Makino, manager of the insurer’s investment planning division. The Tokyo-based insurer last year slashed its hedge-fund holdings by more than 40 billion yen.
Bloomberg – Darwin Capital Premier LS1 Fund, a hedge fund investing in Japanese stocks, has returned 31 percent since opening to investors in January as bets on companies including JP-Holdings Inc. and Daiken Medical Co. paid off.
The fund, advised by DarWin Capital Partners Ltd., began on Jan. 20 after running under a limited partnership structure since June 2006, according to Takafumi Sahoda, founding president of Darwin Capital in Tokyo. Prior to the January start, the strategy returned 224 percent in the 27 months through October 2008 compared with a 54 percent slide in the benchmark Nikkei 225 Stock Average in the same period, he said.
Bloomberg – Sparx Group Co., Asia’s biggest hedge-fund manager, plans to start its first global macro fund, adding a strategy that was among the few winners in 2008 when an equities rout led to the only annual loss in its 20-year history.
The fund, which will wager on trends in stocks, bonds and currencies worldwide, will be sold to institutional investors in the next few months as Tokyo-based Sparx expands beyond equity- related offerings, President Shuhei Abe said. He declined to give the fund’s size, saying that and other details are still being worked out.
Bloomberg – Alphex Investments Co., the adviser to Japan’s first short-biased hedge fund, plans to sell exporters’ shares, wagering they’ll fall on a rising yen and weak global economy, boosting the fund that started in March.
“What we’re seeing right now is nothing more than a bear- market rally,” Ichiro Takamatsu, 44, chief executive officer of the Tokyo-based hedge fund advisory firm, said in an interview yesterday. “We’re going to see a really bad yen rally this year, and that will create an opportunity to profit on exporters.”
The firm started its ASB Opportunity Fund on March 3 with $25 million of seed funding from a New York fund-of-funds seeking to diversify its portfolio, said Takamatsu. The ASB fund, with a net short position at all times, is the first of its kind in Japan, he said.
Reuters Tokyo – Japanese equity fund Unison Capital said on Monday it has raised its planned offer for shares in wig maker Aderans Holdings by 20 percent to 1,200 yen per share.
Unsion Capital and Aderans are locked in a battle with U.S. hedge fund Steel Partners for shareholder votes at Aderans’ annual meeting scheduled for Thursday.
Reuters Tokyo – Hedge funds are dipping their toes back into the dollar/yen options market after months of absence, betting that eventual interest rate tightening by the U.S. Federal Reserve will help the greenback gain against the yen.
Dollar/yen’s implied volatility, a gauge of how much a currency pair is expected to move over a given period, has come down to levels not seen since before Lehman Brothers collapsed in mid-September, sending global markets into a tailspin.
The decline suggests market stress has eased substantially and investor confidence has risen after the battering dealt by the global financial crisis, but it also implies lessening demand for options to hedge against a further surge in the yen.
Reuters UK – New Horizon Capital, a Japanese private equity firm, said it may start raising its second fund this year as it sees opportunities to make money from investing in struggling companies.
New Horizon has five potential transactions in its pipeline, Chief Executive Officer Yasushi Ando said at the Reuters Private Equity and Hedge Funds Summit in Tokyo.
New Horizon is seeking commitment of 20 billion yen (142.1 million pounds) from Japanese and overseas investors for its first fund, Ando said.
Ginga Service Sector Fund, the third-best performing Japan-focused hedge fund in 2008, held its ranking in January by investing only in the telecommunications and services companies.
The 3.4 billion yen ($36 million) fund, advised by Tokyo- based Stats Investment Management Co., returned 0.7 percent last month, extending its 13 percent advance in 2008, according to a letter to investors.
Average losses in the $1.4 trillion hedge-fund industry reached 19 percent in 2008, the worst on record, as the biggest market declines since the Great Depression slashed asset values and caused investors to withdraw their money, according to Chicago-based Hedge Fund Research Inc.
Bloomberg – The head of J-Power, Japan’s largest electricity wholesaler, wants to attract long-term investors to replace its biggest stakeholder, hedge fund TCI, which exited after seeking his ouster in a feud over corporate management.
“Investors such as pension funds, which seek stable returns in this time of financial turmoil, may be one of our preferred investors, in addition to individuals, who search for vehicles for long-term investment,” Yoshihiko Nakagaki, president of the Tokyo-based utility, officially known as Electric Power Development Co., said in an interview in Tokyo.
