Value Partners Group Ltd, an asset manager backed by China's second-largest insurer, postponed "indefinitely" a plan for a new fund to buy Asian bonds sold off by banks and hedge funds.
"Many of the extraordinary value opportunities that were identified by our investment team in preparation for this fund launch have diminished significantly over the past few days," Teresa Yu, a Hong Kong-based spokeswoman, said in e-mails yesterday.
Value Partners had planned to raise funds to buy Asian bonds as the world's biggest banks, forced to record more than US$700 billion of credit losses and writedowns, sought to cut proprietary trading and dump assets. Some hedge funds have also liquidated bond holdings to raise money to help meet investor redemptions, further depressing prices.
"Prices have now rebounded from their distressed trough levels, especially in the high-quality issues that we may have a potential interest," Yu said. That prompted Value Partners' senior management to postpone the fund on Monday until "value opportunities present themselves again."
UBS Convertible Asia ex-Japan Index rebounded 2.7 percent this month, narrowing the one-year loss to 38 percent, according to Bloomberg News. The CS Asian Bond Corporate Total Return Index, tracking liquid, tradable Asian bonds, rose 3 percent this month, reducing the decline in the past year to 15 percent.
The group joins managers such as Blackstone AMN Advisors in postponing or canceling new funds as the global hedge fund industry is on course to post the worst annual returns in almost two decades. The slump in securities markets and rising investor withdrawals led the industry to shrink 6.3 percent last month to US$1.65 trillion, according to Singapore's Eurekahedge Pte.
Asia-Pacific firms have sold US$38 billion of convertible bonds since last year, Value Partners said in a document dated November 19, citing Deutsche Bank AG data. Regional convertible bonds bought back by firms this year yielded as much as 40 percent, according to Merrill Lynch & Co, it said.
Asian corporate bond prices slumped 14 percent last month alone, Value Research said, citing Credit Suisse Group AG.
Value Partners, 9 percent owned by Ping An Insurance (Group) Co, had planned to begin investing the Value Partners Bond Fund on December 8, with a focus on China. The fund was to trade Asia-Pacific convertible, government and corporate bonds.
The group's assets under management declined 28 percent last month to US$3.1 billion, it said in a statement on Tuesday.
(Shanghai Daily November 27, 2008)
