28th March 2023 – (Hong Kong) New York-based hedge fund Mass Ave Global is set to close its China and Asia-focused funds, according to letters seen by Reuters. The firm is also winding down its office in Hong Kong, with the liquidation process expected to be completed by the end of June. The move comes amid a difficult year for China-focused managers, as economic growth slowed and geopolitical tensions continued. The letters to investors did not provide a specific reason for the decision, but noted that co-founder Ray Guo had resigned as head of research in February, while Justin Dew had departed as president, chief operating officer and chief compliance officer.
Mass Ave Global Partners Fund investors will be compulsorily redeemed and withdrawn as part of the liquidation process, the letters said. The first distribution of proceeds to investors will begin before June 30. Mass Ave Global did not immediately respond to a request for comment. The firm’s US-listed holdings were valued at $342.4m last month, with e-commerce giant Alibaba Group Holding Ltd the top holding, according to a filing with US regulators.
China’s zero-Covid policy and geopolitical tensions have impacted the performance of China-focused managers over the past year. Mass Ave Global launched its China/Asia-focused flagship fund in October 2019 as a long/short equity hedge fund, according to data provider Preqin. After gains of 51% in 2020 and 15% in 2021, the fund lost 16% in 2022, but was up 5% in January.
The announcement has surprised some in the industry, as Mass Ave Global was viewed as a well-regarded hedge fund in the region. The decision is expected to have a ripple effect across the sector, particularly in Hong Kong, which has been a key hub for hedge funds in Asia. The closure may also lead to job losses among the firm’s staff.
The challenges faced by China-focused managers have been multifaceted. The country’s now-abandoned zero-Covid policy was intended to contain the spread of COVID-19, but resulted in significant economic disruption. Geopolitical tensions between China and the US have also weighed on the performance of hedge funds in the region. In addition, the Chinese government’s crackdown on technology companies, particularly in the e-commerce sector, has also impacted hedge fund returns.
The decision by Mass Ave Global to close its China and Asia-focused funds and wind down its Hong Kong office is likely to have significant implications for the hedge fund industry in the region. The move comes as China is facing increased scrutiny from international investors over its policies and regulatory environment. However, some analysts believe that the sector will continue to attract investment, particularly as economic growth in the region rebounds.