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RWC Partners has said the blanket shorting bans in Australia and Korea should not hinder the launch of its new long-short, Asian equity, relative return fund.

Carmel Peters, manager on the RWC Asia Ascent fund, which goes live on 20 October, said the markets currently present good opportunities for long-only investors. She did not anticipate shorting any individual stocks at launch given the political risk of doing so.

“The valuations in Asia are looking fantastic right now. In two weeks’ time, we would have 70 per cent net long exposure if the global environment improves. If we think we have an upward-trending market, we will be 100 per cent invested.”

Ms Peters said she believed the sell-off by foreign investors was drawing to a close after the MSCI Asia ex Japan index lost 34.7 per cent since 1 November last year.

“We are back to fundamental long-term investors in this market,” she said. “The Wall Street part of the Asian derating is over. It is the Main Street part that is important now. Exports are slowing and will continue to slow. What you’re looking for is domestically orientated stocks, big companies that are very liquid, with great cash flow.”

In the near term, Ms Peters said she preferred China to India as she felt government intervention in the country’s financial fortunes of the former was more positive.

“Because of inflation, the Chinese government was trying to slow the economy. Now the economy is slowing more than they would like. They cut interest rates and the reserve requirements of the smaller banks. We are expecting to see fiscal measures come out of China in the near future. They already did this in 1998.”

In India, she said, the economy is much more insulated from global demand.

“But India has been in a much worse situation than China,” she said. “You’re also going into a general election in India earlier next year, which ties people’s hands.”

The RWC Asia Ascent fund can be 0-100 per cent net long, use limited leverage and short futures and individual stocks to manage its exposure.