By Aradhna Dayal
In Shanghai this
month to host AsiaHedge's inaugural China Forum, I came across
a completely new China. One that is willing to talk freely
about hedge funds, one that is as comfortable applying index
futures and other shorting techniques as it is with long-only
investing, and one that is not afraid to embrace the high
octane-high alpha strategies of the global hedge fund
Barely a couple of years ago, witnessing something as open
to new ways as this would have been next to impossible. Gone
are the days when domestic asset managers talked in hushed
tones about the grey area of raising hedge fund assets and
global managers tiptoed around trying to find the least
objectionable entry strategies into the country.
Not any longer. In the packed ballroom of the Grand Hyatt -
the venue for the China Forum - top regulators, investors and
fund managers animatedly debated issues ranging from the
changing regulatory environment that is legitimising the hedge
fund industry, to applying global investing models such as
Black Scholes; and international managers talked about
alternative investment entry strategies that will allow them to
operate like domestic asset managers.
This is indeed a new China. One that is opening its arms to
the world, and is eager to make a splash on the global hedge
fund map. And right on cue, the very day after the AsiaHedge
China Forum - on which we will bring you a full report in our
October issue - news came out that the first QDLP (Qualified
Domestic Limited Partner) licences have been quietly awarded on
a trial basis to six international hedge fund groups: Man
Group, Oaktree, Och Ziff, Winton, Canyon and Citadel.
The quotas are expected to be for $50 million each and the
official sign-offs on these quotas is still understood to be in
the works, after which a more public announcement giving a good
more detail can be expected.
While we wouldn't be so audacious as to take credit for this
landmark moment, it is unquestionably the case that events like
the China Forum - and the intellectual buzz they create - have
gone a long way towards developing the right ecosystem for a
truly global hedge fund industry in China.
And while at $50 million the QDLP quotas may look small at
present, we should not lose sight of two facts: firstly that
this is indeed a milestone - one that allows foreign hedge
funds to set up shop in China and raise domestic assets to be
invested abroad; and secondly that in true China
government-style, even the QFII quotas started in a limited
fashion but have been expanded exponentially in recent
Aside from the exciting developments in China, there is
plenty more good news at the broader Asian hedge fund industry
level. The latest AsiaHedge Asset Survey shows a sharp recovery
in industry assets in the first half of 2013, taking assets up
to $153 billion.
While a good chunk of that came from performance (Asian
hedge funds were up a solid 6% in the first six months of the
year), the 10% growth in the first half of the year is also a
testament to the Asian industry's growing prowess as a
globally-comparable business in terms of pedigree and
infrastructure, which saved it from being whipsawed along with
other emerging markets this year.
Strong inflows into Japan funds fuelled by continued
investor confidence in the Abenomics revolution, as well as
reviving interest in China and inflows into macro and
multi-strategy funds, also all helped to contribute to the
industry's growth in the first half.
Our half-year assets survey in this month's issue gives the
full run-down on all the facts and figures behind the
industry's growth and its changing structure.
In Asia's other global superpower, India, a nascent hedge
fund industry is taking shape and we bring you an in-depth
feature on the evolving regulation and the emerging players in
that country. And in our Fund Profile this month, we showcase
two former college buddies and ex-journalists who started out
in the newsroom and ended up running the highly-successful
commodities-focused CTA Splendor Capital.
On top of that, AsiaHedge's latest issue is packed with news
on exciting new launches such as ex-Tiger manager Wang Chen's
Serenity Capital venture, Goldman Sachs' Oryza Capital roll-out
and Pine River's innovative China multi-strategy fund. There
are also updates on the largest hedge fund shops in Asia, such
as Azentus and Turiya, which are crossing multi-billion dollar
asset levels and bringing in strong performance.
These are exciting times for Asia. We hope that you will
enjoy reading this action-packed issue as much as we enjoyed