China stocks hedge fund Cederberg trims fees on poor performance -letter

C&D International Investment

15/11/2022 17:50

By Nell Mackenzie
       Nov 15 (Reuters) - Cederberg Capital, a hedge fund
invested in Chinese stocks, has lowered investor fees after its
returns continue to suffer by China's reluctance to loosen its
COVID policies. 
    Hedge fund manager Dawid Krige told investors in a letter
seen by Reuters he would drop fees by 25 basis points "given the
difficulty our clients have endured over the past 21 months."
This will reduce fees for Cederberg Capital's China Class A and
Class B vehicles to 1.25% and 1.0% respectively, effective on
Jan. 1, 2023.
    The MSCI China index  .dMICN00000PUS  is down almost a third
this year, as China's top leadership body, the Politburo
Standing Committee, has stuck to a "dynamic-zero" COVID policy
meant to keep a lid on China's death toll. 
    Since 2020, China has reported 5,226 COVID fatalities among
its population of 1.4 billion. In contrast, over 1 million
people have died of the disease in the United States.
    Krige's hedge fund, which has around $1 billion in assets
under management, is down about 56% so far this year, according
to his letter. 
    Despite that, Krige said this was a "potentially once in a
decade opportunity" to buy Chinese stocks.
    He warns that his fund is not for the short-term investor,
saying that within the next ten years, the cheap valuations his
stocks hold today will wind up being a bargain.  
    Krige's biggest positions include the Chinese property
developer C&D International Investment Group Ltd  1908.HK , the
Hong Kong Financial Exchange, JD.com  9618.HK  in China, the
social network Prosus  PRX.AS  and Guangdong GR, an
infrastructure fund. 
    Chinese markets have been hit by outflows in recent months
with investors rethinking their exposure to the world's second-
largest economy. Data from the Institute of International
Finance showed Chinese stock portfolios had lost $7.6 billion in
October, the biggest monthly outflows since March.
    Money managers have increasingly launched emerging market or
Asia investment products with no exposure to China to meet
increasing demand for such strategies from global investors.
 (Reporting by Nell Mackenzie in London
Editing by Matthew Lewis)
 ((Nell.Mackenzie@thomsonreuters.com;))