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Alternative Market Briefing

Japanese authorities are shutting out their hedge fund industry GFIA

Tuesday, August 14, 2012

Yoshimi Watanabe
From Komfie Manalo, Opalesque Asia:

Singapore-based wealth management and advisory firm GFIA has accused the Japanese regulator, the Financial Services Agency of "shutting out" the local hedge fund industry.

In its July 2012 Research Insights, GFIA cited the various statements and actions taken by the Japanese government that were detrimental to the local hedge fund industry. Indeed, the data provider showed data that indicated the number of hedge funds in Japan was 61 in 2005 as against 105 in Hong Kong and 60 in Singapore.

The number shrank because of the Liverdoor shock in early 2006 that effectively shutdown the small-cap market in Tokyo which also blindsided many of the stock pickers and at the same time evaporated their assets under management. "With hindsight that was the beginning of the end," GFIA commented.

In 2007 the then Japanese services minister Yoshimi Watanabe described hedge funds as "piranhas" that needed to be expelled. GFIA added, "More recently we have had the AIJ scandal, where a mid-sized alternative boutiques $2bn of assets appeared to have vaporized (admittedly not a hedge fund but the backlash against alternatives was nevertheless real)."

GFIA referred to the report in February this year wherein AIJ Investment Advisors Co., which caters to mostly small and mid-sized Japanese firms that entrust their money to the advisory firm, reportedly ......................

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