Hedge Fund launches in Asia hit 14-year low amid declining interest in China

Hedge Fund launches: Only 62 new hedge funds launched in Asia last year, marking the lowest number since 2009, according to data provided by Preqin.

Of these, just 15 were China-focused funds, while Japan-focused funds more than doubled to 19.

The decline in China-focused hedge funds reflects a broader trend away from the Chinese market, attributed to challenges such as a property sector crisis and trade tensions with the United States.

Conversely, there is increasing interest in Japan, as well as pan-Asia and multi-manager strategies, according to industry experts.

In 2023, liquidations surpassed launches, with 74 funds closing down, nearly half of which were China-focused.

The number of hedge funds with a China focus launched last year plummeted from 34 in 2022 to just 15, the lowest since 2004.

Looking ahead, market participants anticipate the launch of at least three multi-manager hedge funds this year, including one from Arrowpoint Investment Partners, led by Jonathan Xiong, former Asia co-CEO at Millennium Management. 

Sources familiar with the matter revealed that the firm has secured approximately $1 billion from investors for the new fund, but Xiong declined to comment.

Patrick Ghali, managing partner of Sussex Partners, expressed caution regarding crucial growth in new fund launches this year. 

He highlighted Japan's growing appeal but noted that some investors may not fully grasp the potential alpha opportunities in the market, opting for long-only funds instead.

(With Reuters Inputs)