2022 was a bad year for equities around the world, with both the S&P 500 and the MSCI World Index falling almost 20% over the year. Still, one veteran Asia investor managed to return around 15% for his fund, the Asia Genesis Macro Fund. Singapore-based investor Chua Soon Hock, founder and chief investment officer at Asia Genesis Asset Management, tells CNBC Pro about his top trades over the past year that helped his fund’s performance — and what he’s betting on this year. He said markets are likely to be range-trading this year, meaning they are unlikely to rise or fall much. In such a scenario, traders need to be contrarian, he said, describing the investment strategy of betting against market trends. Best and Worst Trades Chua relied on plenty of shorting to carry him through 2022. When an investor sells a stock “short,” they are borrowing shares from a broker and selling them in the hope of later buying back the stock at a lower price. It’s a tactic that works best when the broader market is suffering. Here are his short trades and how they fared. Shorting the Japanese Yen versus the US Dollar: This returned 4.4% for the year. Shorting US Treasury long bond futures initially in the first half of 2022, then temporarily long in the third quarter. This strategy produced net gains of 2%. His long trades included US stocks, which contributed 13% to gains, and an attempt to time the bottom in the Hong Kong market. The latter was his worst trade – losing 1.9%, he said. Other trades that made gains included Japanese, Indian and Chinese stocks. What he’s betting on in 2023 Chua told CNBC Pro he wants to maintain last year’s strategy of selling the yen. He said the yen is likely to weaken to 145 from its recent low of around 128 by the end of the year. The yen had appreciated after the Bank of Japan unexpectedly widened its target range for 10-year Japanese government bond yields in December by changing its yield curve control policy. But the yen weakened again against the dollar in January after the Bank of Japan surprised markets by leaving its tolerance band on the yield curve and interest rates unchanged. But Chua says the country’s central bank ultimately cannot afford to adjust policy too much. “I don’t think the interest rate will change much even if Japan changes their policy because they have to be very careful,” he said. “The Bank of Japan has very little flexibility because it has such large debts that it needs to fund.” Chua also said that short-term Treasury bills have a value of between three months and a year, while long-term maturities of 10 years or more have a ” bad offer”. “So I think there’s a greater likelihood that T-bonds — 10-year, 20-year — will be weak. Prices shouldn’t fall because a lot is changing in monetary policy,” he said. “The players in the bond market are expecting a recession.” He added that he expects investors to continue to see higher yields, particularly for 10-year paper.
