Macro Hedge Fund That Made 47% Says Dollar's Drop Isn't Done

(Bloomberg) -- Former Credit Suisse Group AG trader Charlie Chan, whose macro hedge fund surged 47 percent last year to beat rivals, is holding on to bearish bets on the dollar. For now.

Chan's Splendid Asia Macro Fund, with just under $200 million in assets, wagered correctly in 2017 that regional emerging-markets currencies would gain against the dollar. That is likely to continue as President Donald Trump's “America First” policy will put downward pressure on the greenback, Chan said in a telephone interview from his office in Singapore.

U.S. Treasury Secretary Steven Mnuchin last week triggered the dollar's steepest slide since March by saying “a weaker dollar is good” for U.S. trade. Still, Chan is monitoring his position very cautiously given the sharp pullback. He also expects the U.S. yield curve to steepen, which will help stabilize the currency.

The Splendid fund profited in 2017 from surging Asian stocks as well as the dollar trade, standing out as some of the best-known macro hedge funds struggled to make money amid low global interest rates and subdued volatility. Rokos Capital Management, Brevan Howard Asset Management and Caxton Associates were among those whose hedge funds recorded losses. The HFRI Macro (Total) Index rose 2.2 percent last year to rank as the worst-performing hedge fund strategy.

The Bloomberg Dollar Spot Index has tumbled 3 percent in January, set for the biggest monthly decline since March 2016. The gauge dropped to the lowest since December 2014 last week.

Chan is also retaining a bearish bet on the yen against Asian emerging markets currencies. He is still maintaining his bullish view on Japanese stocks, although is getting more cautious after the Nikkei 225 Stock Average's 19 percent rally last year.

Globally, stocks will stay strong in the first half, Chan said. Tax cuts will boost companies' capital investments in the U.S. Asian stocks are much cheaper than U.S. peers, he said, adding that he is bullish on China and India because of strong political leadership creating stability.

“Further out, it's more difficult to project the political risks and the fiscal directions of the governments around the world,” he said.

To contact the reporter on this story: Bei Hu in Hong Kong at bhu5@bloomberg.net.

To contact the editors responsible for this story: Sree Vidya Bhaktavatsalam at sbhaktavatsa@bloomberg.net, Colin Keatinge

©2018 Bloomberg L.P.