Baring Sees Red In China, Japan

Feb 13 2008 | 12:16pm ET

Baring Asset Management’s bets in the Far East were well off the mark last month. The firm’s Japan Absolute Return Fund and China Absolute Return Fund finished the first month of the year down 8.69% and 9.38%, respectively.

Baring’s $107.9 million long/short Japan fund was down mainly because its portfolio had a net long exposure last month, according to the firm. The fund’s loss was comparable to the Tokyo Stock Price Index, which was down 8.7% in January.

“The Japanese equity market plummeted towards mid-month along with other equity markets as the concerns over the sub prime loan problems intensified once again and U.S. economic statistics deteriorated,” the firm said. “Weaker economic statistics in Japan, stronger Japanese yen and disappointing corporate earnings also contributed negatively.”

The firm’s $60.2 million China Fund last month “maintained a low net exposure of 10% but was hurt by stock selection in particular due to the short squeeze following the U.S. rate cut,” Baring explained. By comparison, the MSCI China Index fell 21.6% for the month.

Baring said that the Chinese equity market is likely to continue on its volatile trading pattern so it will maintain a low net exposure while increasing the fund’s gross exposure to around 120%. Last year, the fund returned 38.58%.

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