- Advertisement -
- Advertisement -

Related

Hedge Funds Resilient As Geopolitical Risk Intensifies

Industry Report

- Advertisement -

Stockholm (HedgeNordic) – Hedge funds are proving resilient in the face of an explosion of geopolitical risk, Lyxor writes in its latest weekly brief. With an increasingly speculative and uncertain first round of the French presidential election, the U.S. strike on Syria and tensions on the Korean peninsula, hedge funds strategies have for the most part remained positive, CTAs being the exception with slowed equity longs and energy shorts.

Lyxor’s own funds did not noticeably change positions, with CTAs remaining long equities, Macro funds keeping limited and relative exposures, and L/S Equity U.S. funds remaining more exposed than European ones, the latter adding safeguards.

“We are comfortable with our positioning,” wrote Jean-Baptiste Berthon, Senior Strategist and Cross Asset Researcher with Lyxor Asset Management. “We see lesser prospects for macro players until some uncertainties are lifted this summer. We see greater micro opportunities for L/S Equity and Special Situation funds, supported by a recovery in earnings (in for another test as the season starts) and intensifying corporate activity.”

The first round of the French election, set for April 23, remains impossible to predict, having become a four-way race with each candidate polling in the 18-23% range. Worries are intensifying that the late surge by the communist candidate Jean-Luc Melenchon could result in a two-way race between him and the Front National’s Marine Le Pen in the second round, which would considerably improve Le Pen’s chances of winning the presidency. Ms Le Pen has campaigned on an anti-immigration platform and has promised to hold a referendum on withdrawing France from the European Union.

On the Korean peninsula, threats by the DPRK to conduct its sixth nuclear test alongside a failed missile launch last weekend in response to U.S. president Donald Trump’s aggressive posture and an enhanced U.S. presence along Korean shores have put China under additional pressure to resolve the issue, upsetting China’s traditional status quo on the issue.

In the U.S. itself, failed initiatives in Trump’s political program have led investors to seriously question the degree of reflation that might be delivered, cooling some of the initial enthusiasm for his presidency.

In response to these uncertainties, the French OAT spread reverted to January highs, the implied Kospi volatility rose 5 points, safe havens outperformed cyclical assets and U.S. treasury yields receded alongside other reflation trades.

 Picture: (c) Ollyy—shutterstock.com

 

 

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

HedgeNordic Editorial Team
HedgeNordic Editorial Team
This article was written, or published, by the HedgeNordic editorial team.

Latest Articles

Rising Adoption of Quantitative Investment Strategies Among Nordic Investors

From a high-level perspective, there is a clear trend of increasing adoption of quantitative investment strategies (QIS) among Nordic institutional investors, either through the...

EU Plans Stress Test for Hedge Funds and Non-Bank Firms

European regulators are planning a stress test to identify vulnerabilities beyond the traditional banking sector, focusing on less regulated entities such as hedge funds,...

ALCUR Fonder Continues Hiring Spree

Following two earlier additions this year, ALCUR Fonder continues to expand its portfolio management team at a notable pace. The Stockholm-based hedge fund boutique...

Nordic Private Markets Modernize with Data-Centric Trade Lifecycle Automation

By Anders Stengaard Jensen at Indus Valley Partner: In recent years, asset managers in Nordic countries have accelerated efforts to modernize trade operations, particularly...

Norwegian Hedge Fund Industry Sees Major Boost with New Launch

The Swedish and Danish hedge fund industries remain closely matched in size, with Denmark recently edging ahead of Sweden. While still less than half...

Atlant Funds Hold Up in May Despite Mistimed Market Call

Macroeconomic and market forecasts are notoriously difficult, even for experienced hedge fund managers. What matters more than being right, however, is ensuring that incorrect...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.