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Hugh Hendry’s Hedge Fund Profits As Chinese Economy Huffs and Puffs

Hugh Hendry’s Eclectica Credit Fund, which is designed to profit on a slowdown in the Chinese economy, has soared in value over the past two months as global markets tanked.

Eclectica Credit Fund gains where other funds lag  by capitalizing on a series of short positions against Japanese corporate credits facing a high exposure to Chinese demand. By comparison, most hedge funds have lost value this year as markets receded.

Hendry’s modest $150 million fund launched last year as one of a few hedge funds positioned against Chinese growth – and, as a result, other notable investors such as Anthony Bolton. Eclectica Credit is up 39% year to date, returning nearly 23% in August – the most turbulent month for world markets since the collapse of Lehman Brothers in 2008 – and another 11% in September.

The success of Hugh Hendry’s Eclectica Credit Fund parallels the speed up in the Chinese slowdown as Wu Xiaoling, the former deputy central bank governor of the National People’s Congress, indicated the economy would cool next year amid inflation concerns.