The Hong Kong hedge fund sector has been seeing a steady improvement in business as more and more proprietary traders are choosing to move their funds from banks to Hong Kong based hedge funds. This is a sign, say observers, that the industry has turned a corner, boosted by a recent Securities and Futures Commission report that points out that the industry is making a nice comeback in recent weeks.
Following a slow-down and shrinkage of the hedge fund marketplace in 2008 analysts now see a sharp rise in funds flowing from banks to hedge funds in addition to an uptick in the number of international hedge fund managers who are setting up their offices in Hong Kong and elsewhere in Asia.
A yearly report, the Hong Kong hedge fund survey, which is published by the Hong Kong Securities and Futures Commission (SFC) shows clearly that AUM (assets under management) are moving upward. In September 2010 hedge fund assets in Hong Kong were valued at $63.2 billion, a substantial increase from March 2009 when assets in hedge funds reached only $55.3 billion.
“We think it is genuine growth. 2008-09 was a difficult period for the Asian hedge fund industry,” said Giselle Lee, executive director at Man Investments in Hong Kong.
“The industry is now in a growth phase evidenced by two things. Firstly, lots of proprietary traders from investment banks. Some banks have eliminated these desks or they have shrunk dramatically, so lots of prop traders have set up their own shops. And lots of global funds which run Asian books have decided to open an Asian office,” explained Lee.