Asia-based hedge funds are on course to chalk up their worst annual performance figures in 12 years, with long-short stock-picking funds having been caught out by volatility in China, according to a report by Reuters.

While Asia nmacro strategy funds, like their counterparts elsewhere in the world, have benefited from big global shifts in interest rates, the report cites a series of China factors that have proved problematic for other hedge funds including China unexpectedly loosening its rigid Covid-19 movement and testing controls, and. President Xi Jinping's consolidation of power is another factor that has impacted the performance of equity managers with long China positions.

The Asia market was broadly weak - index provider MSCI's benchmark China index was down about 27 per cent for this year to the end of November and its Asia ex-Japan index down almost 20 per cent.

The report cites data from Euerekhedge as revealing that, on average, Asian hedge funds have fared better than indexes – MSCI's benchmark China index is down about 27 per cent for this year to the end of November – having lost 9.1 per cent up to the end-November.

Should that trend continue, it would see Asia hedge funds collectively slump to their worst returns since 2008. Asia equity long-short funds have lost 12 per cent to the end of November, while and Greater China long-short funds have lost 14 per cent. Asia macro funds are up 12 per cent, while Asia multi-strategy have recorded a 1 per cent gain.