4 Big Reasons to Watch New Japan Hedge Fund

“Attracted by the recent Weibo IPO and the widely anticipated Alibaba listing, sophisticated global hedge funds continue to identify opportunities, both long and short, in Asian equity, credit and currency markets. Hedge funds continue to actively position for progressive policy developments, as well as continued strategic M & A involving Asian corporations, with both of these serving as catalysts for monetizing opportunities created by increased market efficiency in coming quarter,” he said.

3. Appeal to a wider audience.

The Tidal Fund is intended for a wider audience than Zone’s first fund, and among those it hopes to attract are investors outside Japan. To that end, the fund is offered through the platform of Gordian Capital Singapore Pte. Not only will that allow the fund to reach a broader spectrum of investors, it will also allow Zone to focus on the fund itself and not on the details of administration.

Mark Voumard, executive director and CEO of Gordian, said that currently the Tidal Fund is not open to U.S. investors. He added that the firm does have other long-short Japan funds open to U.S. investors, subject to prequalifying conditions.

4. Abenomics.

Japanese Prime Minister Shinzo Abe gave Japan’s economy a boost with Abenomics, his package of policy initiatives built on three “pillars” or “arrows”: monetary policy, fiscal stimulus and structural reforms. While Abe has “shot” two of the “arrows” in the quiver, launching a moderate economic recovery, there are still structural reforms to be tackled, and their potential effects are still unknown.

A slowdown in the wake of higher taxes—Abe boosted sales taxes from 5% to 8% in April, which hit consumer spending—and a lessening impact on imports of a weaker yen may have caused some investors to look warily at investments in Japanese companies. However, despite such negative factors as a 3.3% decline in factory output from May to June—the largest since the earthquake and tsunami in 2011—and a drop in business sentiment over the second quarter, new orders did rise in July, along with a slight increase in new export orders.

Expectations were that consumers, who stocked up prior to the increase in sales tax, would gradually acclimate themselves to the higher rate and resume consumption. In July, consumers did head back to the shops, and Japan correspondingly raised its overall economic assessment.

And despite the second quarter fall in business sentiment, the Bank of Japan’s latest Tankan survey also indicated that large companies intended to increase investment by 7.4% in 2014.