LONDON, Nov 12 (Reuters) - Former Credit Suisse bond

trader Hamza Lemssouguer's main $3.7 billion fund at Arini

jumped 23.4% through the end of October, benefiting from bets

against European manufacturers facing U.S. and China headwinds,

said a source and an investor letter.

The year-to-date gains beat recent industry averages for

hedge funds trading corporate debt, which have returned 9% over

the same period, and distressed players, which are up an average

of 11.5%, according to hedge fund research firm PivotalPath.

The Arini Credit Master Fund made short bets centered on how

electric vehicles and satellite companies in Europe will likely

be squeezed between increasing U.S. protectionist measures and

China's ability to mass-produce at low costs, according to a

September letter sent to investors and seen by Reuters.

The fund, which takes both long and short bets on the value

of bonds as well as options bets aimed at protecting and

profiting from macro-economic swings, has yet to send its

October update.

A short position takes the view that an asset will weaken in

price.

Bonds issued by companies in the satellite industry traded

lower in September with some falling as much as 10% on news that

Elon Musk's Starlink won two major contracts with United

Airlines and Air France, according to the September letter.

Starlink's European competitors are facing a powerful

challenger whose CEO is expected to benefit from the backing of

U.S. President-elect Donald Trump.

"We remain concerned at the level of debt the legacy

geostationary satellite companies are carrying into a period

where they need to defend market share despite an inferior

product and higher pricing," the letter said, also pointing to a

"swath of profit warnings" from European auto companies during

September.

Waning European consumer demand, fading government stimulus,

'cratering' used electric vehicle prices and high labour costs

will all pose further detriments to the industry, it said.

Europe's weakness, despite any fiscal easing it might

employ, will continue to stem from having to pay for commodities

which are primarily priced in U.S. dollars.

The dollar has gained since Trump secured election victory

last week, particularly against the euro, which has fallen

almost 3% to touch a 7-month low around $1.0617 on Tuesday

.

Arini, which oversees $6.7 billion, had returned 7.8% in its

$375 million Arini Structured Credit Equity Fund by end-October,

according to a person with knowledge of the matter who declined

to be named because the details are private.

Arini was originally spun off from Squarepoint but is now

fully independent. It trades the high-yield and distressed debt

of global companies but concentrates on its European expertise

guided by London-based founder Lemssouguer who started the hedge

fund in January 2022.

A spokesperson for Arini declined to comment.