Hong Kong’s Value Partners Group recorded a net outflow of US$1.8 billion in the first quarter, dragging its total assets under management down to $10.9 billion as at March 31, a 27% plunge from $15 billion at the end of 2019.
The figures are the worst in recent years and underscore how the coronavirus pandemic has battered global markets and hurt investor sentiment.
Fund redemptions in the first three months of the year totalled $2.9 billion versus $1.1 billion of subscriptions, Value Partners says in a statement on April 17. The net figure topped its $1.7 billion redemption for all of 2019.
The statement does not provide any reasons for the declines.
According to a fund consultant based in Hong Kong, the quarterly redemption is one of the worst since the global financial crisis over a decade ago, and the asset figure is the lowest since 2013.
A Value Partners spokesperson points out that the three months to March was “one of the most challenging quarters”, when countries shut their borders and imposed strict conditions on travel and business to curtail the spread of Covid-19, the disease caused by the coronavirus.
“During the period, all markets retreated under country lockdown. The market also faced fear of global recession due to a simultaneous global demand and supply shock,” she tells Asia Asset Management (AAM). “As investor sentiment was dampened and fund performance weakened after the Covid-19 outbreak, our funds recorded net outflows as a result.”
For example, she says assets of the Value Partners Classic Fund declined 17.7% in January through March, a period in which the Hang Seng Index fell 15.4%.
She did not respond on how the overall redemption and asset figures compare with previous years.
The redemptions were mainly from the company’s high dividend fund and flagship classic fund, according to Jemmy Huang, equity research associate at J.P. Morgan Securities (Asia Pacific).
“I am not surprised with the first-quarter figures with the current volatile market condition,” Mr. Huang tells AAM, noting the pandemic’s impact on global markets.
He believes the company’s business may recover later this year, particularly when the economy in China, its major market, stabilises.
A rebound in global stocks and bonds may help drive up Value Partners’s assets in the current quarter, according to the fund consultant in Hong Kong.
“However, the group may still make losses at the operational level…Most of its total profits last year came from proprietary investment, but the [proprietary] business may turn into a loss in the first half this year,” he tells AAM, speaking on condition of anonymity.
