Wed, Feb 10, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Asia Pacific Intelligence

The View From Beijing - Our on the scene report from the inaugural hedge fund symposium in China

Monday, October 08, 2012

Adam Steinberg, director of the Hedge Fund Association's China chapter, and senior project manager for New Alliance Consulting International reported to Asia Pacific Intelligence on the inaugural hedge fund symposium in Beijing, held at the beginning of September at the Cheung Kong Graduate School of Business (CKGSB).

Steinberg says: "Around 40 people turned up for the event and in addition to the several CKGSB MBA students in the audience, we had strong representation from the very small hedge fund community in China, including Pine River Capital; Hillhouse Capital; Man Group; China Investment Corporation (Absolute Return Group); Efficient Capital Management; JP Morgan Asset Management and CICC."

Of these firms, Pine River Capital is the only US hedge fund doing trading research from mainland China, having built a team of about 10 quantitative researchers in the country.

The three panellists at the session were:

  • Professor LI Haitao: Visiting Professor of Finance at CKGSB, Professor of Finance at The Ross School of Business, University of Michigan
  • Oliver Barron: Head of Beijing Office for NSBO, a London-based market research and advisory firm
  • Iain Mills: Beijing-based reporter for Investments & Pensions Asia and an advisor to global hedge funds

Steinberg, who moderated the discussion, said that it focused on three of the "hottest" topics with regards to hedge funds in China: QDLP; QFII and Hedge Fund Industry Sector Growth in China.

Steinberg reports: "QDLP is a proposed policy coming from the Shanghai Municipal Government and it hasn't been fully approved or announced - although there has been a great deal of chatter. Based on the current newsflow, QDLP licenses will be given to non-Chinese hedge funds with AUM of at least USD$10 billion each; with these licenses (and we don't know how many in total will be issued), these hedge funds will be able to set-up shop in Shanghai and raise RMB funds from Chinese institutional investors and HNW individuals - the funds raised will need to be used/invested outside of China. According to reports, in "Year One" only USD$5 billion (in RMB) combined will be allowed to be raised by QDLP license-holders. This amount would steadily increase as the program develops. As a panel, we believed that QDLP licenses would not be issued until 2013. Also, we felt that this policy would be "mostly symbolic" for global hedge funds - a symbolic positive step - but not a game changer".

In terms of QFII, Steinberg and his panel reported that QFII licenses have been issued to "Qualified Foreign Institutional Investors" such as Morgan Stanley and Goldman Sachs since 2003. "Although they have not yet been issued to hedge funds, hedge funds may currently buy China "A" Shares through either a QFII broker or through a Chinese broker. They have access but not direct access" says Steinberg.

QFII would allow foreign hedge funds to directly purchase China A Shares (long only) but the Beijing panel did not believe that foreign hedge funds will be issued QFII licenses anytime in the near future. "Hedge fund will continue to use the hedging tools that are currently available of which there are several" says Steinberg, "QFII is not the only tool."

In terms of hedge fund industry growth in China, the panel were more optimistic, seeing opportunities for the development of a hedge fund infrastructure ecosystem developing in China, including lawyers; capital-raisers and public relations consultants. "They will all be ramping up their hedge fund efforts in the near future as a mini hedge fund industry blossoms" says Steinberg.

 
This article was published in Opalesque's Asia Pacific Intelligence our monthly research update on alternative investments in the Asia-Pacific region.
Asia Pacific Intelligence
Asia Pacific Intelligence
Asia Pacific Intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. How Einhorn survived a nightmare year[more]

    From Bloomberg.com: Even when a hedge fund has an awful year, which was the case for David Einhorn's Greenlight Capital, there are lessons to be learned. Many funds would have had a tough time surviving a year like Einhorn experienced in 2015, when all the stars seemed to align against him and Green

  2. Legal - Hedge fund founder wins early release in U.S. insider trading case, Gramercy seeking $1.3 billion from Peru over land-bond dispute[more]

    Hedge fund founder wins early release in U.S. insider trading case From Reuters/Streetinsider.com: Former hedge fund manager Doug Whitman on Tuesday won a reprieve from serving the remainder of his two-year sentence for insider trading after several judges expressed skepticism that his 2

  3. Investing - David Einhorn finds a winner in Michael Kors[more]

    From Thestreetinsider.com: Greenlight Capital hedge fund manger David Einhorn took his lumps in 2015. The fund lost over 20 percent on the year amid bets gone bad being long a plunging SunEdison and short a couple high-flying FANG stocks. However, today Einhorn is again showing his stock picking pro

  4. Investing - Avenue Capital's Marc Lasry: We like European bank loans, Comment: A bunch of hedge fund managers are chasing the 'dream of crushing a major structural problem'[more]

    Avenue Capital's Marc Lasry: We like European bank loans From CNBC.com: European banks are under immense pressure, but at least one prominent hedge fund has found what it thinks is a good opportunity in the wreckage. Marc Lasry, co-founder and chief executive of hedge fund Avenue Capital

  5. Credit Suisse cherry picks hedge fund ideas[more]

    From FT.com: Credit Suisse Asset Management plans to cherry pick profitable concepts from hedge funds with the launch in Europe of a “best ideas” strategy. The investment arm of the Swiss bank said the strategy will separate it from other funds blighted by “overcrowding problems”. It comes at a time