The Asian hedge fund industry closed 2012 with its highest investment levels since 2007 as major markets in the region delivered strong gains, the latest Hedge Fund Research report reveals.

In the HFR Asian Hedge Fund Industry Report, total hedge fund capital invested in the Asian hedge fund industry rose to $88.25 billion -- its highest since before the 2008 financial crisis. Total capital went up by $3.9 billion in the fourth quarter of 2012 on a new net inflow of $1.17 billion, mostly into emerging Asia. On a global scale, the hedge fund industry grew to a record level of $2.25 trillion as of year-end 2012.

China, India and Japan posted the highest gains among Asian countries. The HFRX China Index increased 8 per cent for the fourth quarter and 9.4 per cent for the full year. The HFRX India Index gained 4.3 per cent for Q4 and 27.6 per cent for 2012. The HFRX Japan Index rose 2.5 per cent in the quarter and 8.1 per cent for the year. 

The total number of Asian hedge funds rose by 5.3 per cent in 2012 to almost 1,150. Around 32 per cent of these are located in China, up from 28.6 per cent as of year-end 2011. The percentage of Asian hedge funds in Japan and India also went up, while those located in Singapore and Australia, which represent the second and third largest share of Asian-domiciled fund locations, declined.