Hedge funds brace for second stock market plunge
https://finance.yahoo.com/m/c98296d6-00d7-3765-bca4-bf72f3765c55/hedge-funds-brace-for-second.htmlFt article
Managers say asset prices have become too detached from bleak fundamentals
/New York Stock Exchange in Wall Street. There are fears investors may have become too complacent after the recent surge in share prices © AFP via Getty Images
June 4, 2020 3:00 am by Laurence Fletcher in London
Hedge funds are getting ready for another slump in stock markets after growing uneasy that surging prices do not reflect the economic problems ahead.
Some managers fear that equity investors, used to buying the dips during the decade-long bull market that ended in March’s sharp sell-off, have become too complacent about how quickly economies can recover from the coronavirus crisis and how effective stimulus packages from central banks and governments can be.
The S&P 500 index completed its best 50-day run in history on Wednesday, according to LPL Financial, closing within 8 per cent of its record high of mid-February.
“The markets are priced to perfection,” said Danny Yong, founding partner at hedge fund Dymon Asia Capital in Singapore. “The stability in equity markets does not reflect the job losses and the insolvencies ahead of us globally.”
Mr Yong has been buying put options — which protect against market falls by allowing their owner to sell at a pre-determined price — on stock indices and also on currencies sensitive to risk appetite such as the Australian dollar and the Korean won./
Are you folks buying more equities at this stage?
