Ward Ferry Management, a hedge fund in Hong Kong with over USD70 million in assets under management, is looking to increase its use of over-the-counter options by USD10-20 million (notional) in the next month as it sees strong investment opportunities in India. "We can't hold stock, we can only hold OTC options for that market," said Edgar Fok, analyst in Hong Kong, noting that as the fund does not have a securities license for India, it takes exposure via over-the-counter options. "We expect strong performance in this market," he said, adding that as the global technology sector rebounds, India, which is a major technology manufacturer, will benefit.
In a trade at the end of last month, Ward Ferry purchased USD2 million of one-year European options on I.T. services company Digital GlobalSoft with a strike at INR438. The option can be exercised at maturity in December. He declined to comment on the premium. Digital GlobalSoft was trading at INR570 Wednesday. "Digital GlobalSoft's recent earning forecasts were quite good," noted Fok explaining the reason for singling out the Indian corporate.
The long/short hedge fund, launched early last year and registered in the Cayman Islands, primarily invests in cash equities and futures in Asia. The fund's prime broker and counterparty is Goldman Sachs.
