A year ago today, Asia Genesis Asset Management announced that they were closing. The decision came after a 'disastrous' January of trading that followed several difficult months and destroyed the confidence of CIO Chua Soon Hock.
Every trader has gone through a struggle and feeling that he is losing his edge. This is a real example of the pain of doing it wrong for a steady stretch. In particular, China's assets and policymakers' response have continued to unsettle market participants.
Dear Investor,
I am writing to you with a heavy heart and with deep regret. Asia Genesis Macro Fund has experienced an unprecedented large drawdown of -18.8% in the first weeks of January. Therefore, I am making the painful decision to close the fund and return your investments. This decision has been well thought out and considered by my colleagues and is the sensible logical way forward before further losses occur. A detailed explanation of the drawdown, actions taken to manage the Fund's risk, and expected losses for investors can be found on the next page.
I have reached the point where my confidence as a trader has been lost. The recent hard trade – October, November, December 2023 and then the disastrous January 2024 – has proven that my previous knowledge is no longer valid and instead, it is working against me. I have lost my knowledge, trade, and intellectual edge. The risk reward principle for both the short and long term has been turned on its head. We made big mistakes in the recent Nikkei and Hong Kong sharp movements that went in the opposite direction. I did not underestimate the Nikkei straight line movement up and Nikkei ETFs being bought at a price of 20% over net value on China exchanges, and how long this will continue.
I still do not understand the inconsistency of China's policy makers who do not fight against deflation, leading to a continuous loss of market confidence and a long bear market. We made another big mistake in trying to pick the bottom in the Hang Seng and Hang Seng Tech indices. I am fascinated by the incredible Nikkei-Hang Seng spread that priced Chinese stocks against Japan at the same value as in 1991, despite the current economic realities.
In the coming days and weeks, we will follow up with each of you regarding release from the Fund. Our CITCO asset manager will calculate the Net Asset Values of the Assets and my team will work closely with them to process the return of your investment as quickly as possible. At the same time, we will still be able to answer any questions or provide more information.
My deepest and most sincere apologies to all of you who trusted me with your money.
With sincere apologies, thanks, and great thanks,
Chua Soon HockCIO
Notably, this hit marked the bottom for the Hang Seng Index and has rallied 32% from there. As any trader knows, this only makes the pain worse for Chua Soon Hock. His LinkedIn profile currently shows that he is 'retired' but he is still active on the platform and is optimistic about the $45 trillion in Chinese savings moving into equity markets.
“Be patient, Spring is coming to the Chinese stock markets,” he said
Hang Seng every day
