The Stock Connect programme linking Hong Kong and Shanghai is seen as a key factor behind the surge in trading volume supporting a record monthly gain by hedge funds invested in China in April, according to Hedge Fund Research.
The index provider said that its HFRI China index was up 13% in April, the strongest monthly gain since inception in 2008.
Meanwhile, total capital invested in the Asian hedge fund industry went past the $120bn mark, as the number of Asian hedge funds reached close to 1,200. Globally, hedge fund assets hit $2.95trn in the second quarter of 2015.
In the first four months of the year, the HFRI China index rose 18.8%, and the HFRI EM: Asia ex-Japan index gained 14.5%. Inflows to Asian hedge funds totaled $1.1bn in the first quarter, HFR said.
Kenneth Heinz, president of HFR, said: “Recent developments with Chinese equity markets, including performance and trading volume, are both exciting and historic in magnitude, with significant involvement and participation from Asian-focused hedge funds attracting capital and interest from global investors.”
“As exciting as the environment has been, it is likely that the Asian hedge fund industry is only now at the beginning of a capital growth cycle, as global investors position for continuation and extension of these gains, while seeking to use sophisticated strategies to protect their portfolios from the volatility inherent in these markets”