Hedge funds eye volatile Asia power markets with new hires

Japan Times

09-04-2025

Hedge funds have joined the hunt for power-trading talent in Asia, as they push into the region's increasingly active and volatile electricity markets with the aim of offsetting declining profits from mainstay commodities.
Over recent years, the pandemic, then Russia's invasion of Ukraine and the crisis that followed created major disruptions in energy supply — and windfall profits for trading houses and hedge funds. As the nature of global upheaval changes, traders are looking elsewhere.
In Asia, that has increasingly meant electricity.
"Hedge funds have been very active in hiring for commodities trading,' said Ailing Huang, an executive director at Singapore-based recruiter Kerry Consulting, who leads the firm's energy and commodities practice. "They're guided by where the volatility is and where markets are more active, and that includes power markets in Japan and Australia.'
Australia has a large, mature electricity market with relatively few players and plenty of space for new arrivals. It's also more unpredictable, with grid constraints, regular outages at old coal-fired plants and periods of high renewable energy production that prompt negative prices.
The 30-day historical volatility for power prices in the Australian state of Victoria — a measure of deviation from its past average — reached nearly 500% last year. In contrast, European natural gas recorded levels of as much as 78%.
Japanese futures, meanwhile, are the fastest-growing power contract under the European Energy Exchange — the world's biggest electricity bourse. While trading volume is still much smaller than mature markets such as Germany, Japanese derivatives contracts quadrupled last year, according to the exchange.
Physical trades matter too.
Japan's market liberalized in 2016 and has since attracted many looking to make profit. With more green energy and uncertainties surrounding nuclear plant restarts, there has been enough movement to appeal to traders.
"Despite all the geopolitical events facing energy markets, oil — and gas to a certain extent — are seeing reduced volatility. This has pushed speculators to look elsewhere,' said Warren Patterson, head of commodities strategy for ING Group in Singapore. "The power market is offering this higher volatility.'
While Asian power markets aren't as sophisticated and connected as in Europe, Australia and Japan are seen as two entry points for companies to dip their toes into the wider region — and many have been adding new arrivals in Singapore.
To attract a limited pool of applicants that have industry experience and — in the case of the Japan market — can speak English, funds are committing large base salaries. In part, that's compensation for smaller bonuses, given these are still a function of portfolio size and those can be smaller in power, especially in Japan, according to candidates and recruiters involved in filling trading and portfolio-management roles.
"There's a short supply of talent,' said Kerry Consulting's Huang. "There's a lot of know-how in conventional energy commodities, but there's a shortage for power trading.'
Jain Global hired portfolio manager Liam David in Singapore late last year to trade power markets in the Asia-Pacific region, according to people familiar with the matter. The ex-Danske Bank trader is involved in Australian electricity markets, the people said. David did not respond to requests for comment, while Jain said it had no comment.
Earlier this year, Citadel hired the former head of Japan commodities sales at Morgan Stanley MUFG Securities, Hironao Sakata, for its power business there. The fund acquired a local company last year in an effort to expand its commodities business in Japan.
Balyasny Asset Management's Singapore-based natural gas and power team is looking to add portfolio managers, according to people familiar with the matter, while industry peer Qube Research & Technologies is also hiring for the Australian power market, separate people with knowledge of the firm said. Balyasny and Qube declined to comment when contacted by Bloomberg.
Trader Vitol Group, Wall Street giant Goldman Sachs Group and Danish trading firm InCommodities are among other companies that recently acquired their license to trade physical electricity contracts — distinct from cash-settled financial futures — in Japan.
Also in Japan, a venture between Jera — the world's biggest liquefied natural gas buyer — and the trading arm of global energy giant Electricite de France last month said it would merge and integrate the Japanese power operations of the two companies, with a team of 50 set to operate out of Tokyo.
"Japanese power trading presents opportunities for greater optimization and flexibility across the energy value chain,' said Justin Rowland, chief executive officer of Jera Global Markets. "With the majority of our traded fuels being delivered into Japan, this market is important to us.'