Aman Capital Management, a US$242 million (HK$1.88 billion) hedge fund, may have lost more than US$43 million, or 18 percent of its assets, last month by investing in derivatives based on the Korean Composite Stock Price Index, the Financial Times reported, citing industry experts.

Asked whether the report was accurate, Aman partner Mayur Ghelani said: ``No, it's not'', but he did confirm that Michael Syn, an ex-UBS derivatives specialist who was one of its main fund managers, had left the company as reported.

Syn could not be reached for comment.

``The fund and the directors and the investment managers are keeping the investors informed and advising them on everything that's going on, and until a review is finished we'll decline to comment on any speculation,'' Ghelani said.

South Korean stocks rallied at the beginning of the year, with the benchmark Korean Composite Stock Price Index (KOSPI ) rising about 14 percent to a five-year high of 1,025.08 on March 7. But it has since dropped about 9 percent, falling 5.6 percent last month, but rebounding 2 percent this month.

The Aman Capital Global Fund is a macro fund taking bets on stocks, currencies and interest rates. It enjoys exempt fund manager status in Singapore because it has no retail investors, according to an industry official. Peter Douglas, Singapore head for the Alternative Investment Management Association, said a loss on the scale Aman reportedly suffered is not insurmountable for a hedge fund and that a recovery is still possible.

``Hedge funds have bounced back from even greater losses,'' he said.

Aman Capital's prime broker, UBS, said it is continuing to provide services to the hedge fund.

``As prime broker to Aman Capital Global Fund, UBS is working closely with its client to execute its instructions consistent with the fund's internal requirements,'' a spokeswoman said. ``It should be noted that UBS had no discretion over the investment decisions of the fund, nor was UBS mandated to provide any risk oversight functions to the fund.''

An industry official said that following the report, hedge fund allocators may freeze any sums they were originally planning to place with Aman.

It would also be very difficult for the firm to earn a performance fee, the lifeblood of hedge funds, in the current year, the official said.

Fund industry official Douglas said Asia's fast-growing hedge funds industry is unlikely to be damaged.

``In the context of an industry of 560-570 hedge funds in Asia, for one to lose 20 percent [of its assets] is extremely unfortunate for that fund. But it's not really a huge issue for the industry,'' he said.

Research firm Eurekahedge expects fund investments into Asia to rise to US$80 billion by the end of this year, up from US$60 billion at the end of December.

The reported losses at Aman come after Singapore-listed China Aviation Oil collapsed in November under US$550 million in derivative-trading losses.

The mainland jet fuel trader Thursday said it will ask for more time to report its earnings for last year and to hold its annual general meeting.

It will seek ``approval from the Accounting and Corporate Regulatory Authority for an extension of time to announce its financial results for the financial year ended 31 December, 2004, and to hold its annual general meeting in respect of the full year.''