The GlobeOp Capital Movement Index, which represents the monthly net of subscriptions to and redemptions from hedge funds administered by hedge fund administrator GlobeOp, has revealed that hedge fund investor sentiment remained stable, despite the number the raft of devastating earthquakes that hit Japan over the past month and the number of geo-political events in the Middle East, that initially left the relevant financial markets in turmoil.
“Investor sentiment remained calm during the reporting period, despite events in Japan and in the Middle East,” says Hans Hufschmid, CEO at GlobeOp Financial Services. “GlobeOp’s data, which represents approximately 8-10% of the hedge fund industry, is in contrast to the headlines that the Japan earthquake and unrest in the Middle East has dramatically affected hedge funds, with investor unease.”
The GlobeOp Capital Movement Index represents the monthly net of subscriptions to and redemptions from hedge funds administered by GlobeOp, divided by the total assets under administration (AuA) for GlobeOps fund administration clients.
Redemptions were slightly greater than subscriptions for the month of April.
On Friday, March 11, a massive earthquake that measured 8.9 on the Richter scale hit Japan. The quake hit off the North Eastern coast and caused a 10-metre-high tsunami to hit the coast.
The tragedy, naturally, had a huge impact on the Japanese financial markets, which in turn has had repercussions on the global markets.
At one point, the Japanese equity markets saw the worst price plummets since the 1987 crash, despite the Bank of Japan (BoJ) pumping the system with JPY 15 trillion to stabilise the markets.
Today (Tuesday April 12.), a month after the first earthquake in Japan, the country’s economy has stalled in seven out of nine regions, according to the Bank of Japan. Yesterday (Monday April 11.), another magnitude 7.4 earthquake struck the North coast of Japan and have ripple effects in Tokyo.
Meanwhile, geo-political unrest in Libya, Egypt and Iran has caused turmoil in the wider financial markets, including oil, which has seen a major shift in volatility over the last 6 weeks.
Cumulatively, the GlobeOp Capital Movement Index for April 2011 stands at 130.19 points, a decrease of 0.05 points over March 2011. The Index was based at 100 on December 31, 2005 and has advanced 17.19 points over the past 12 months. The next publication date is May 11th, 2011.
The GlobeOp Forward Redemption Indicator for March 2011 stands at 3.26%, a decrease of 0.10% from February 2011. The Indicator represents the sum of forward redemption notices received from investors in hedge funds administered by GlobeOp, divided by the AuA at the beginning of the month for GlobeOp fund administration clients.
While the GlobeOp data shows the previous hedge fund investor reaction to the first set of events to have a knock-on effect in the financial markets, investment managers say that investors should remain cautious but not panic.
“Natural disasters are a supply shock to the economy and the uncertainty accompanying it often forces investors to chase liquidity and sell stocks and other investments in order to raise cash. We currently at Crossbridge Capital are not raising our investment in Japanese equity at this time,” says Manish Singh, Head of Investment Services at private wealth management group Crossbridge Capital.
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