The Korea Composite Stock Price Index, or the KOSPI, climbed to another 52-week high on Tuesday, as stock markets throughout the Asian region posted gains.

The Korean stock market got a lift from news that North Korea was backing down from its earlier threats of retaliation against military drills that were being carried out by South Korea.

Positive sentiments ruled the European markets today. While STOXX Europe 600 Index has gained 0.20%, London's FTSE 100 Index moved up 0.14%.

Asian markets ended in mixed territory, with Japan's Nikkei Stock Average adding 0.02%, Australia's S&P/ASX 200 moving up 0.32% and China's Shanghai Composite losing 0.46%.

Oil futures fell 50 cents to $88.12 per barrel. Gold futures were at $1,385.50 an ounce.

The Korea Composite Stock Price Index, or the KOSPI, which has been approaching its 52-week high of 1,976.46, moved closer to the 52-week high during the Tuesday trading session in Seoul.

Just after the market opened, the index of Korean stocks dipped before climbing higher. The index began to fall again, nearly reaching the previous day's closing level of 1,953.64 before climbing higher for the remainder of the day. The KOSPI ended Tuesday up 8.88 points, or 0.45%, at 1,962.52.

Hedge funds are mysterious. Some of the managers are billionaires. There is little regulation and there are occasional implosions. More importantly, hedge funds have more than a trillion dollars in assets.

So if there are problems in the financial markets, it's probably a result of the devious schemes of hedge funds, right?

A recent piece in the New York Times looks at this. And, yes, hedge funds are getting the blame for the volatility in the Asian markets.

The theory does have some credence. Over the past few years, hedge funds have become a much bigger part of Asian markets, and the growth is likely to continue.

After all, hedge funds thrive on volatility. That's how they find short-term profit opportunities.

But can they really cause it? Maybe in some cases. But its tough to do this on a consistent basis.

Perhaps the big issue is that there appears to be a slow-down in the Chinese economy, which impacts all Asian markets.

The funny thing is, though, no one complained about the volatility when the markets soared. But once the inevitable correction hit, the hedgies become an easy target.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

In the new issue of Business Week, Maria Bartiromo conducts an excellent interview with Carlyle Group co-founder David Rubenstein about his outlook for private equity in 2007.

Rubenstein predicts more money going into emerging markets, and he said the Carlyle Group will double its investment in Asia this year. He is also weary of increased government regulation of private equity groups, and provided a great quote: "The Declaration of Independence says we're supposed to pursue happiness, but when people are too happy, the government doesn't like it."

If other private equity groups follow Carlyle's lead of doubling up on Asia this year, emerging markets could see a buyout-fueled bull market similar to what the United States saw in 2006. I suspect that exchange-traded funds could be the best way to make that bet.