Macquarie's (MQG.AX) Asia hedge fund - From Reuters

REUTERS - Macquarie's (MQG.AX) Asia hedge fund has exited its short positions in Indian single stock futures in response to a controversial set of proposed tax rules that could lower investment returns.

Instead, it has decided to use a futures contract linked to India's 50-share NSE index Nifty on the Singapore Exchange to get its short exposure to India, according to an investor letter of the fund seen by Reuters, a switch other funds may also make.

The $1.5 billion Macquarie Asian Alpha Fund, one of the top performing in Asia and among just the 30 or so hedge funds managing $1 billion or more in the region, also cut its India long exposure in March, joining a number of foreign investors reducing their holdings in the country ahead of the expected tax rules.

Foreign investors have raised concerns on two recent Indian provisions to tax indirect investments and combat tax evasion.

The Macquarie fund's India stock short positions dropped from 2.6 percent in February to nil in March, while the gross exposure, or the sum of its long and short positions, fell to 3.2 percent from 5.4 percent, according to the investor letter.

The fund's co-portfolio manager, Andrew Alexander, declined to comment. A spokeswoman for Macquarie could not be reached for comment.

(Reporting by Nishant Kumar in HONG KONG; Additional reporting by Rafael Nam in MUMBAI; Editing by Michael Flaherty and Muralikumar Anantharaman)

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