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11:12 AM
Justin Grant
Justin Grant
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After Quake, Hedge Funds Go Long on Japanese Equities

Goldman Sachs employees may be trying to flee their Tokyo digs , but hedge funds apparently can't get enough of Japan right now.

Goldman Sachs employees may be trying to flee their Tokyo digs , but hedge funds apparently can't get enough of Japan right now.

Prior to the earthquake, hedge funds bet heavily on Japan's equity markets to falter. Many took out futures contracts to wager the Nikkei 225 - the index for the Tokyo Stock Exchange would fall, prior to the March 11 disaster, according to a report by Dow Jones' Financial News.

But proving the old adage buy low, sell high right - hedge funds have shifted to a net long exposure to the Nikkei, the report said. While this strategy definitely appears morbid in a sense following the tragedy, it does seem like a logical move for Asia-focused asset managers.

Since the crisis, hedge funds have shifted from being net short-sellers of Nikkei futures by $330 million, to holding a net long position worth $464 million by March 22, the report said.

From Financial News:

John Livingstone, a portfolio manager for an Asia focused fund of hedge funds run by Aberdeen Asset Management, said hedge funds took a bet that Japanese government would be able to cope with the Japanese disaster, but they were also investing directly into Japanese firms whose customers and production are predominantly outside Japan, and where share prices had fallen more than was justified.

Paul Marson, chief investment officer of Lombard Odier Private Bank, said "The Japanese equity market would appear to be extremely cheap by historical standards in a particularly loose monetary environment."

As the Senior Editor of Advanced Trading, Justin Grant plays a key role in steering the magazine's coverage of the latest issues affecting the buy-side trading community. Since joining Advanced Trading in 2010, Grant's news analysis has touched on everything from the latest ... View Full Bio
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