SINGAPORE/HONG KONG (Reuters)- The Asia-Pacific’s hedge fund industry, long seen as less sophisticated than its U.S. and European peers, is about to find out its focus on equities rather than complicated debt instruments may be its saving grace.
Even though a fund run by Australia’s Basis Capital became the region’s first major victim of the global credit squeeze, the dearth of Asia-Pacific funds investing in credit markets means it should suffer less than global peers.
The Basis Capital vehicle filed for U.S. bankruptcy protection after being slammed by the losses on its investments in complex collateralised debt obligations (CDOs).
It joined the ranks of other high profile flameouts caused by credit market turmoil, including Sowood Capital and funds run by Bear Stearns. Many firms have been stung because of the use of high levels of leverage, or borrowing, that painfully amplified losses when bets went bad.
The credit market turmoil, triggered by a meltdown in the U.S. subprime mortgage sector, has also caused problems at funds run by Australian peers Macquarie and Absolute Capital.
