23-1-2024 (SINGAPORE) Asia Genesis Asset Management, a Singapore hedge fund, has announced the closure of its macro fund following a substantial drawdown attributed to the recent stock market turbulence in China and the surging rally in Japan.
According to a letter sent to investors and viewed by Bloomberg News, the Asia Genesis Macro Fund experienced a significant drawdown of 18.8 percent in the initial weeks of January. The fund is now in the process of returning money to investors due to losses incurred on long positions in Hong Kong and China equities, as well as short positions on the Nikkei, as explained in the letter.
Chua Soon Hock, the founder and chief investment officer, expressed in the letter, “I have reached the stage whereby my confidence as a trader is lost.” He attributed the fund’s struggles to challenging trading conditions since October and a “disastrous” January, which have made it evident that his previous experience is no longer applicable and is, in fact, working against him.
As of the time of this report, Asia Genesis has not responded to requests for comment.
Mr. Chua acknowledged a “big mistake” in attempting to predict the bottom of benchmark Hong Kong indexes and expressed surprise at the Nikkei-Hang Seng spread, which valued Chinese and Japanese stocks at the same level as in 1991. While Japanese stocks have surged to a 34-year high in January, driven by initiatives to enhance shareholder value and corporate governance, China’s CSI 300 Index hit a five-year low on January 22 due to a housing slump impacting economic growth.
The turning point for Asia Genesis was the disappointment stemming from the People’s Bank of China’s decision to keep interest rates on its one-year policy loans unchanged in January, contrary to expectations. President Xi Jinping’s subsequent speech, indicating a lack of focus on the markets, led the fund to close all positions by January 18.
Mr. Chua candidly admitted, “I have lost my knowledge, trading, and psychological edge.” The principles of risk-reward, both in the short term and long term, have become challenging, prompting the fund’s closure.
