Hedge Funds & Financial Markets
Hedge Funds & Financial Markets | Insights
Since 99% of all hedge fund press is negative right now I couldn't help but publish this piece from an industry spokesperson in London. Here is an excerpt from the article:
Chief executive of Aima in London, Florence Lombard, thinks hedge funds are being unfairly bashed for the recent stock market falls and that short selling will ultimately be exonerated.
Florence Lombard is the chief executive of the London-based Alternative Investment Management Association (Aima). During a visit to Hong Kong, she spoke to AsianInvestor.
What effect is the current state of the markets having on hedge funds?
Different levels of impact in different parts of the world, with the majority of the direct negative impact being experienced in Europe and in America, particularly as a consequence of the various short selling bans which have had a negative effect on hedge fund performance.
Here in Asia, the landscape appears to look better at this point, but when you are faced with these kinds of extreme and erratic conditions, institutional investors do need liquidity and may redeem their investments in hedge funds in order to plug holes.
What was your reaction to the shorting bans?
We understand the severity of the problems arising in the banking sector, and why 'circuit breakers’ might have been perceived as a temporary measure. From what they were seeing, the regulators believed that short selling was partly to blame for the downward movement in shares. However, shares have continued to fall even when short selling wasn’t available, so we know now that you cannot explain the severe drop in value as being solely attributable to shorting. Also, even in cases when shorting was allowed, the data available suggests that the number of shares available for borrowing in certain stocks, for example HBOS, can’t account for the extent of that stock’s price fall. Read more...