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Hedge fund liquidations rose in 2016

Hedge fund liquidations in 2016 increased to 1,057, higher than the 1,023 liquidations in 2009 but lower than the record 1,471 liquidations in 2008


Graphics by Subrata Jana/Mint
Graphics by Subrata Jana/Mint

Hedge fund liquidations in 2016 increased to 1,057, higher than the 1,023 liquidations in 2009 but lower than the record 1,471 liquidations in 2008, according to data from Hedge Fund Research (HFR).

The number of launches in 2016 slowed down, with the fourth quarter seeing 153 launches, the lowest quarterly total since the first quarter of 2009. However, total hedge fund industry capital increased to $3.02 trillion, as of end-2016, surpassing the year-ago level of $2.9 trillion.

Kenneth J. Heinz, president, HFR, said that this underscored the “shifting investor risk tolerance and steadily increasing concentration of investor capital in mid-to-large hedge fund firms”.

Weak physical oil market hits $50 bn hedge funds’ bet

Saudi Arabia, Russia and other big oil producers are trying to clear a global crude glut, but three months into the effort, the physical oil market is still signalling plentiful supplies. The excess offers little comfort to financial traders, whose bets that futures prices will rise equate to about $50 billion in nominal terms. While few expected the Organization of the Petroleum Exporting Countries (Opec) and 11 other producers to eliminate a surplus overnight, the oil glut punishes bulls by dragging down futures markets that are ultimately anchored to physical price benchmarks.

The value of long positions for Brent and West Texas Intermediate crude, the global and US benchmarks, reached a combined $56 billion on 23 February, the highest since Opec announced the output cuts in late November. Those bets, measuring futures and options positions, indicated that investors expected prices to rise. In recent days, the value of those contracts has dipped to $49.3 billion. In barrel terms, speculative trades reached a record on 24 February.

Textile market under pressure in FY17

Global apparel trade contracted for the second consecutive year in calendar year (CY) 2016 due to subdued demand conditions in key importing countries, according to ICRA. So far, CY2017 has seen a modest recovery. Apart from India, growth has moderated for other Asian exporters such as Bangladesh, Cambodia, and Vietnam. The weak trend in global apparel trade is expected to help those focused on the domestic market do better, according to an ICRA release. But the temporary pressure owing to demonetization is likely to see the gap between growth rates narrow significantly. Growth for apparel producers was relatively weak at about 8-10% during FY2016 and FY2017, lower than earlier years, and as a result, total fabric output, too, is expect to see a decline of 1% in FY2017, according to the ICRA release.

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