SAO PAULO, Feb 11 (Reuters) - CSHG Fundo Verde FIC FIM, a hedge fund managed by Credit Suisse Group’s Luis Stuhlberger, posted a slight loss in January as unexpected market risks in the United States and China and worries about Brazil’s economic imbalances weighed on the value of the fund’s stock holdings.
According to a letter to investors distributed on Tuesday, the Brazil-based fund shed 0.06 percent, its first loss in four months. The loss compared with a return of 0.84 percent in Brazil’s benchmark CDI interbank interest rate for the month, the letter said.
January’s loss stemmed from the fund’s exposure to stocks, which offset gains in currencies and stable returns from fixed-income investments, the letter said. Stuhlberger oversees more than 20 billion reais ($8.3 billion) in assets at Verde as chief investment officer of Credit Suisse Hedging Griffo, the Swiss bank’s asset management division in Brazil.
“There was in fact excess optimism in prices, which was corrected throughout January and the start of February,” the letter said, referring to economic data in the United States. The combination of more uncertainty in U.S. and Chinese markets “is particularly toxic” for emerging market assets, it added.
When Brazil’s local problems - which the letter did not spell out - mix with rising global uncertainty, the lack of adjustment in, for instance, the country’s exchange rate “ends up hampering mainly other assets classes,” such as stocks, the letter said. “Over time and randomly, we believe that this situation will normalize,” the letter said.
The turmoil in emerging markets, despite the perception that it is mainly a by-product of the woes facing the U.S. and Chinese economies, “won’t end because of a decision by the Federal Reserve or the Chinese Communist Party,” the letter said.
Instead, it will end, “as most crises do,” when asset prices compensate investors for the risks taken and the perception of economic policies in emerging economies improves, the letter added.
“Prices have already started to adjust and, in some cases, polices too. But this movie is far from over,” the letter added.