WEST PALM BEACH, FL (www.hedgeco.net) – A new released survey shows that hedge funds were responsible for the recent market sell-off in the emerging market debt. J.P. Morgan conducted the new survey,according to the survey; Hedge funds now hold short positions in the emerging market debt. Such change in direction resulted from new change in the technical view of the foreign emerging market debt.
Jonathan Bayliss, head of quantitative strategy in emerging market research at JP Morgan in London said, �The interesting thing is that the dedicated (emerging market) guys have not changed their exposure, but the hedge funds have cut significantly.” Bayliss added, “But I think the message to take away from this is that once the market stabilizes, the underlying positives will reassert themselves.�
J.P. Morgan surveyed 333 managers overseeing about $437 billion in investor assets, in the area of fixed-income and foreign exchange of the emerging market. The new survey also shows that the volatility index was increasing, generally an indicator perceived as negative for managers trading such markets. The survey also noted that, �Trading accounts are the only category of participant which has reduced exposure. Dedicated participants have unchanged market exposure while Crossover participants have marginally increased exposure.�
Further details of the survey show that, “At the country level we have seen a broad, but small reduction in exposure. The biggest reductions have been in Russia and the Philippines. Smaller reductions have come from Brazil, Turkey, Ukraine, Uruguay, Mexico and Ecuador. Argentina and Venezuela are little changed.�
On inflow level, the J.P.Morgan study shows that inflows remain relatively unaffected, however the study believes that mutual fund inflows may be depressed part of the reason being the high levels of volatility seen in the market. About $7.3 billion of new debt were issued through March 16, compared to $13 billion recorded for the month of February.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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