(Bloomberg) --

As the coronavirus began to take its economic toll on the U.S. and Europe last month, hedge funds in China were busy boosting their war chests.

The nation’s hedge funds registered 2,733 new products in March, more than double February, according to data compiled by Shenzhen PaiPaiWang Investment & Management Co. Two of the biggest firms, Shanghai Minghong Investment Management Co. and Perseverance Asset Management, launched 19 and seven new products respectively, official records show.

Although most don’t disclose fundraising details, Shanghai-based Wealspring Asset raised more than 8 billion yuan ($1.1 billion) last week for a single stock-and-bond fund run by star manager Yang Dong, people familiar with the matter said, asking not to be identified because the details are private. That dwarfs the industry average of 59 million yuan per fund in assets.

As China’s economy emerges from the depths of coronavirus despair, money managers are turning bullish again. Lockdowns are being lifted, people are getting back to work and authorities are stepping up efforts to get business moving. One-third of hedge funds plan to boost their domestic equity holdings in April after trimming exposure in March, according to PaiPaiWang.

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“The local share market is entering a fairly good space, it’s leading the global market by half a cycle,” said Liu Ke, chief investment research officer at Cathay Rock Asset Management. “We’re looking at more products in the second quarter for the more stable, long-only strategies.”

No. 2 Performer

Liu’s Beijing-based fund of hedge funds, which manages more than 10 billion yuan, believes retailers and trading firms will be among the first to recover amid government stimulus. He’s optimistic the pandemic outside of China may peak around mid-April as the world enforces social distancing and steps up efforts to find a cure.

Wealspring’s Yang, who founded the company in 2018, isn’t only known for his performance track record; the former head of Aegon-Industrial Fund Management Co. made headlines in 2007 when he wrote an open letter calling on investors to pull their money out of the stock market as it reached dizzying heights ahead of the global financial crisis.

Aegon-Industrial’s flagship Global Vision stock fund ranks as the No. 2 performer in China for the past 10 years through March 31, with an annualized 8.4% return, according to China Galaxy Securities Co. Yang left Aegon-Industrial in 2017.

While raising funds in a downturn can help managers build positions at a lower cost, Chinese investors are also becoming more sophisticated and can see value at current levels, according to Liu Youhua, an analyst at PaiPaiWang. It’s a different approach from before, when retail investors used to pile into funds when stocks were rising, but leave equally quickly when they fell.

The benchmark Shanghai Stock Exchange Composite Index declined 13% during March as Covid-19’s spread outside of China accelerated. Still, shares have rallied about 6% from their lows last month.

A shift in sentiment wasn’t the only reason new product launches spiked. The Asset Management Association of China, which regulates the private fund industry, helped by opening a fast-track approvals process for qualified managers in early February and shortening approval times to as little as one day.

Even so, not everyone is optimistic. Anybody buying risky assets amid such volatility could “easily end up getting buried,” said Lu Jun, founder of macro hedge fund Shanghai Congrong Investment Management Co.

Also, almost half of hedge funds tracked by PaiPaiWang have a neutral view for April as the pandemic remains severe in many countries. Some 61% say they’re holding their positions at current levels, while around 6% are planning to cut exposure.

©2020 Bloomberg L.P.