Straight Talk - Revisiting diversification: The must-have tool for investors

In January 2024, Chua Soon Hock, CIO of the $330 million fund Asia Genesis Asset Management PTE Ltd, wrote a letter to his investors: "I am writing to you with a heavy heart and utmost regret. Asia Genesis Macro Fund has had a significant and unprecedented drawdown of -18.8 per cent in the first weeks of January. As such, I am making the painful decision to close the fund and return your investment". He goes on to state, "I have reached the stage whereby my confidence as a trader is lost... I have lost my knowledge, trading and psychological edge." Hock's fund bet against the rising Japanese markets and bought into the falling Chinese markets. Both bets went against him. Hock isn't the only investor who has seen losses in China. T. Rowe Price Group has seen its China holdings fall 80 per cent from the peak. Banxia Investment Management cut its position two weeks into January, stating that 'it must lose an arm for survival'. The firm, founded by Li Bei, had turned bullish from the third quarter, anticipating monetary and fiscal policies to support the market - policies that fell short of market expectations. The rout in the Chinese market was set off by government action attempting to curtail the profits of leading tech companies and socialise gains. It has resulted in a collapse of property and equity markets. Over $5 trillion of value was lost. But why should Indian investors

This article was originally published on March 01, 2024.