Asian Hedge Funds Sky-Rocket

March 28, 2011 James Heinsman Hedge Fund News

China Heading Up or Down?

Although China-based hedge funds didn’t do so great last year compared with peers around the world, interestingly they still “took in money almost twice as fast,” netting inflows of US$3.5 billion (marking a 23 percent growth), significantly higher than the entire global hedge fund industry (which was 14 percent). In the same time frame, the hedge funds reached $18.68 billion in assets under management. This was significantly less than the figure they reached in the third quarter of 2007 ($22.84 billion).

East Versus West

According to London’s Financial Times, Singapore and Hong Kong have been doubling the size of their hedge funds over the past year. While that’s great news for the east, it seems to be having a negative impact on their neighbors abroad, most particularly London and New York. A staggering 80 percent increase in just one year has been noted in Asian cities hosting hedge funds. Last year there were 10 and now there are 18, totaling over $1bn.

As well, Hong Kong has been getting a nice amount of high-profile launches which look set to breakthrough the $1bn mark in 2011. Azentus is one such example of this hedge fund about to be established by ex-head of Goldman Sachs’ proprietary trading operation GS Principal Strategies, Morgan Sze, set to raise around $1.5bn, making it into the “largest global hedge fund start-up since 2007.”

Great Eastern Economic Environments

It is perhaps not surprising that these Asian cities are now doing so well when you look at what they’ve been doing to their economies. Singapore and Hong Kong today have extremely low-tax environments with minimal regulations making it a definite plus for hedge fund managers. Indeed, Hong Kong has no sales or capital gains tax and no VAT. Plans are set to eliminate stamp duties and income tax only stands at a high of 20 percent for those in the HK$105,000+ bracket.

As a result of these figures, the environment is exceedingly attractive to Americans and Brits are coming by the truckloads to benefit from this lax attitude.

China, Financial Times, Goldman Sachs, Hong Kong, London,

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