China Focused Hedge Funds had worst monthly performance this July in last seven years. The HFRI Index for China, which tracks hedge funds that predominantly invest in China, declined by 7.77% in July, worst monthly performance since January 2008. Hedge funds suffered around $10 billion in outflows in July after Chinese market collapse. The problems in financial markets have further multiplied with sudden devaluation of Chinese Yuan in August. The Chinese economy is also slowing down.
Should Hedge Funds withdraw from China? Let us have a closer look on the current issues and economic outlook for China.
Chinese Yuan’s Devaluation brings uncertainty
On August 11, the Chinese central bank came out with a new exchange rate formation system. According to this, the Yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day in the spot foreign exchange market. The central parity is based on the previous day’s close, foreign exchange supply and demand and the rates of major currencies. This is a step forward to make Yuan more market driven.
China cut the value of its currency for three consecutive days taking the reductions to around 4 per cent this week.
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Peyman Khosravani is a global blockchain and digital transformation expert with a passion for marketing, futuristic ideas, analytics insights, startup businesses, and effective communications. He has extensive experience in blockchain and DeFi projects and is committed to using technology to bring justice and fairness to society and promote freedom. Peyman has worked with international organizations to improve digital transformation strategies and data-gathering strategies that help identify customer touchpoints and sources of data that tell the story of what is happening. With his expertise in blockchain, digital transformation, marketing, analytics insights, startup businesses, and effective communications, Peyman is dedicated to helping businesses succeed in the digital age. He believes that technology can be used as a tool for positive change in the world.
