Sunday 11 December 2016

China's top hedge funds soar 70pc by 'sucking blood from the tip of the knife'

Zhang Dingmin

Published 01/11/2015 | 02:30

China's top 10 performers, run by Ze Quan Investment, Sunrise Investment, Zexi Investment and Yingyang Asset Management, found gains in the June-August period by heeding a famous maxim: markets are ruled by fear and greed
China's top 10 performers, run by Ze Quan Investment, Sunrise Investment, Zexi Investment and Yingyang Asset Management, found gains in the June-August period by heeding a famous maxim: markets are ruled by fear and greed

China's summer market selloff wasn't a total rout if you were one of the country's top-performing hedge funds that gained an average 70pc as almost 1,300 other funds were wiped out.

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The country's top 10 performers, run by Ze Quan Investment, Sunrise Investment, Zexi Investment and Yingyang Asset Management, found gains in the June-August period by heeding a famous maxim: markets are ruled by fear and greed.

"I was scared," admits Jiao Ji, chairman of Sunrise, based in northeastern China's Jilin province, who dumped all his holdings in May, sat out the post-June 12 crash, and then made strategic purchases on brief upswings prompted by government intervention in July. Chasing gains at the top of the market was, he said, like "sucking blood from the tip of the knife".

Four of Sunrise's funds made the top-10 list of the 2,193 stock funds in China in the three months through August, say Shenzhen Rongzhi Consultants, which tracks hedge funds. All 10 funds had sold their holdings or stayed out of the market before the June selloff.

China's stock hedge funds as a whole suffered an average 18pc decline from June through ­August, according to Shenzhen Rongzhi, while the ­Shanghai Composite Index fell 30pc during the period. The June crash spurred a $5trn selloff.

Almost 1,300 hedge funds were liquidated in 2015 as of the end of August, and 303 of 2,193 funds recorded gains during June through August, according to Shenzhen Rongzhi.

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