Asian Hedge Funds

Asian Fund Leverage & Prime Brokerage

(http://hedgefundblogger.com) It seems that many Asian-based hedge funds have dodged a few bullets by not being tied as closely to Bear or Lehman… that combined with traditionally using less leverage than some other funds might have helped a few Asian hedge funds weather this storm. By a few I mean very few – recent data suggests that Asian funds are down more than their peers over the last few months. Below is an excerpt on how some Asian funds have dodged the prime brokerage woes of US and UK based groups:
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ASIAN hedge funds are relatively shielded from the distress that their counterparts in developed markets are weathering, thanks to their use of ‘far less’ leverage, said UBS head of prime services (Asia Pacific) David Gray.

‘Our clients have been extremely sensible in the way they use gearing . . . and far more constrained in their use of illiquids.’

Still, Asian hedge funds could see redemptions of between 10 and 40 per cent. A clearer picture of the redemption rate is expected to emerge in early November.

Funds’ cash levels vary between 20 per cent and more than 50 per cent, ‘far higher than we have seen previously’. A year ago, cash levels were between 5 per cent and 10 per cent.

UBS yesterday hosted its third pan-Asian hedge fund conference. The bank’s prime brokerage is the third largest in Asia after Goldman Sachs and Morgan Stanley, with a market share estimated at about 15-17 per cent. Prime brokerage continues to generate strong results for the group.

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