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Asian Hedge Funds Seek Safe Harbor in India, Japan as Bessent, Trump Say Both Close to Deals

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Michelle deBoer-Jones
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Asian Hedge Funds India
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Asian hedge funds bet that India and Japan would be the first to negotiate tariff deals with the U.S., and it turned out they were right. Treasury Secretary Scott Bessent said they were close to a deal with India and had had “substantial talks” with Japan over a potential trade deal.

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President Donald Trump later told the press on Tuesday that tariff talks with India are “coming along great” and that he expects to strike a deal with New Delhi.

Asian hedge funds target Indian, Japanese stocks

After a period of drawing back from the market, Asian hedge funds dipped a toe in the water last week by adding to their positions in Indian and Japanese stocks, according to Morgan Stanley. The move came after they slashed exposure when Trump announced sweeping tariffs in early April.

Asian hedge funds also bought Taiwanese stocks, albeit mostly due to short covering, but they slashed their positions in Australian and Chinese stocks, Morgan Stanley said in a report on Tuesday.

Indeed, Japanese stocks have already recovered all the losses recorded since the “Liberation Day” tariffs on April 2. The Nikkei 225 is up slightly on the month.

Meanwhile, Indian stocks were some of the first in the world to recover from their losses, with the NIFTY 50 ticking 3% higher this month.

Close to deals with Japan, India

Hedge funds had bet on those two countries successfully negotiating a trade deal with the U.S., and it turned out they were correct.

There were signals that India would be among the first to sign a trade deal with the U.S. Indian Prime Minister Narendra Modi went to the White House in late February, and Trump told reporters on Tuesday that Modi wanted to make a deal.

Trump’s remarks followed comments made by Bessent, who said the U.S. was making progress with India. Vice President JD Vance met with Modi last week, and Bessent said they “made some very good progress, so I could see some announcements on India,” although he didn’t provide any particular timeline for a deal.

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Michelle deBoer-Jones is editor-in-chief of Hedge Fund Alpha. She also writes comparative analyses of stocks for TipRanks and runs Providence Writing Services. Previously, she was a television news producer for eight years, producing the morning news programs for NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spending a short time at the CBS affiliate in Huntsville.