New Delhi – The recent turmoil in Asian equity markets has sparked a familiar cry from some investing corners: It is all the fault of hedge funds.
Dozens of these funds have set up shop in Asia in the past 24 months, hoping to find lucrative opportunities outside the crowded capital markets in Europe and the United States.
Their trading in the region has grown significantly over the past two years: They were responsible for 22 percent of the brokerage commissions paid on Asian cash equity trades in 2006, up from 5 percent in 2004, according to Greenwich Associates.
Critics, generally small traders and brokers in markets, say the funds’ growing influence in Asia exacerbated the stock drops that rocked global markets early this month and has kept many Asian equity markets on edge since. Hedge funds are only going to create more unpredictable gyrations in the future, they say.
