Not everyone is a loser. China-focused hedge funds record best gains since 2019.

Steel wielding in China.

China-focused hedge funds made their best monthly performance in half a decade in April, as the Chinese market rebounded following the coronavirus sell-off. This has helped them outperform their global peers.

The Eurekahedge Greater China Hedge Fund index — which tracks almost 70 hedge funds with about $30bn between them — climbed 9.7 per cent last month, according to new data.

China’s coronavirus situation has settled and the economy has largely returned to normalcy. With factories returning to operations and consumers buying, China’s Purchasing Manufacturing Index (PMI) jumped from 35.7 to 52.0 from February to March. However, it dipped slightly to 51.0 in the month of April due to weakness in the exports sector as many countries are in lockdown and still dealing with the coronavirus outbreak in their home country. But this has not stop a strong rally in the world’s second largest economy as Beijing has begun reopening its economy in a calibrate manner.

These hedge funds have done a good job in capturing the market upside when the major Chinese index started to rebound.

However, there have been concerns over the outlook for Chinese property developers which has been hit hard by the pandemic and face a $20billion wall of payments on dollar denominated debts maturing this year. The situation is worsen by the fact that the USD has remained strong during the time of this crisis. This translates to higher repayment for the Chinese property developers.

Moreover, Trump has order federal pension funds not to invest in Chinese stocks citing serious national security risk to the United States. This could further dampen the growth of Chinese stocks.

Maybe the true recovery and another rebound will happen when the global economy makes it through the Covid-19 pandemic.

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