PCI Investment Management, a Hong Kong-based asset manager with over USD500 million in assets, is considering buying basket equity options for its USD20 million equity portfolio in the coming months. Walter Wu, executive director, said it would buy puts to protect against a possible fall in the market. The value of Asian stocks is being kept high by foreign investors which have entered the market this year, said Wu. Adding, if these investors move to other markets there could be a dramatic fall in price. "We're an absolute return biased manager," said Wu, noting that at the moment the fund employs a long-only cash equity strategy, coupled with hedging via index futures or options.
The notional size of the trades will range between USD1-3 million. Wu declined to cite potential counterparties but noted that the fund speaks with a number of major trading houses. Execution skills and information flow are the primary factors for selecting a counterparty, Wu explained. PCI's prime broker is HSBC.
