Founder of Top Chinese Hedge Fund Admits Mistakes After Losses

Li Bei

(Bloomberg) — The boss of a top macro hedge fund in China has publicly accepted the blame for wrong-way bets on a speedy Chinese recovery, after her macro fund lost as much as a quarter of its value.

Li Bei, founder of Shanghai Banxia Investment Management Center, said her flagship Banxia Macro Fund has outperformed Chinese stock markets this year, but still registered a maximum drawdown of 25% from a peak in the middle of last year, the worst of her career, according to a post on WeChat on Tuesday.

“I made the mistake of assuming a quick victory,” Li said, admitting that the intensity of China’s policy response to its faltering economy had failed to meet her expectations.

The benchmark CSI 300 Index hit a five-year low on Monday, as China’s ongoing housing slump curtails economic growth and deflationary pressures mount in the wider economy. It’s a brutal turnaround from a year ago, when hopes were riding high that China’s emergence from the pandemic would fuel major gains across financial markets.

Li said she was optimistic on the government’s property policies in the fourth quarter of last year, betting that a slew of measures would arrest the housing crisis. But fiscal and monetary support has slowed since then, and China’s “real estate policies, both in terms of actual implementation intensity and execution speed, were significantly lower than expected,” she said.

Li said she’s cut back on her positions having lost money, but remains confident in her country in the long run.

“I have no intention of complaining about the country and blaming the government,” she said. “I have faith in the future and fortunes of this nation.”

–With assistance from Henry Ren.

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