Asian hedge funds: Comfortable with quant
Distressed debt has been a fairly popular strategy among Asian hedge funds. According to Eurekahedge, about $6 billion is being managed in distressed debt Asian hedge funds. Average performance of the funds up to the end of July was 5.71%, making it entirely possible to reach double digits by the end of the year. Moe Ibrahim has been running the Asian Debt Fund since January 2004. Starting with capital from Thai investment bank Finansa and Japanese private equity fund JAIC, Ibrahim now runs about $240 million in Asian distressed debt. The opportunities are abundant. “There is about $2 trillion of debt in default in Asia. If you remove Japan, that’s probably $1 trillion, and about $750 billion is in China,” says Ibrahim. There is no rush to move in, however, he points out. “China’s distressed debt market will be there for ever, but will only be full exposed when the economy starts to slow down.” Ibrahim believes default rates in the US will creep up over the next 12 months, spilling over into Asia and ushering in the next distressed debt cycle.
