HSBC sees macro hedge funds profiting from Libya crisis

By Laurence Fletcher

LONDON | Wed Mar 9, 2011 9:23am EST

LONDON (Reuters) - Hedge funds that bet on interest rates and
currencies are set to profit from the economic fallout from Libya's
unfolding crisis, says HSBC Alternative Investments, which has
already benefited from rising oil prices.

The uprising in Libya, the bloodiest in a tide of pro-democracy
protests in North Africa and the Middle East, has already helped push
up the price of Brent crude to its highest since 2008 last month.

Certain strategies such as global macro -- made well-known by
managers such as billionaire George Soros -- and computer-driven
trend-following funds have already profited with gains of 1.29
percent and 1.59 percent, respectively, in February, according to
Hedge Fund Research, helped by energy and commodity bets.

HSBC AI, which runs funds of hedge funds, is positive on macro funds
-- which bet on moves in currencies, interest rates, commodities and
stocks -- and thinks they may profit further if the North Africa
crisis hits global economic growth.

Such an consequence could cause central banks to cut or delay raising
interest rates, providing a range of new opportunities for these

"Macro and trend-followers are making a bunch of money," said Peter
Rigg, global head of the alternative investments group, at a press
interview on Tuesday.

"If the circumstances persists, then the effect on growth and the
response of central banks will be very fascinating. Macro managers
should be very well placed, and fascinating opportunities will come
out of it."

While hedge funds made a range of bets on Europe's sovereign debt
crisis last year, many have shied away from taking positions on the
North Africa turmoil for dread of being 'whipsawed', or betting on a
market go only to see it immediately reverse.

But, HSBC AI said it has already profited from funds that bet on
volatility or market trends.

"Our managers are generally making excellent money from the
circumstances," said Tim Gascoigne, global head of portfolio

"One example is volatility; when you get volatility you can generate
excellent returns. Volatility and trend-followers are making money in
these conditions."

(Twitter: @reutersfletcher. To read the Reuters Funds Blog click on; for the Global Investing Blog click here)
(Editing by Sinead Cruise and Will Waterman)

Source: Reuters.Com