Asia-focused hedge funds are increasingly setting up shop in China, rather than London, New York or Tokyo, and shifting more of their attention to the mainland than to the Pac Rim, Hedge Fund Research indicated in a report.
And as an overall category, Asia-focused hedge funds are attracting more attention from investors, said Kenneth Heinz, president of HFR. Asia-focused hedge funds rose 18.9% in the second quarter, and China-focused hedge funds delivered returns of 19.8%.
As the HFR report notes, “The number of Asia-focused funds based in China has surpassed the number headquartered in the U.K. and is approaching the number of Asia-focused funds located in the U.S.”
But China is still making it rather difficult for overseas hedge funds to set up shop, so many are eyeing Hong Kond, Mark White, general manager of hedge funds-of-funds Castle Alternative Invest, told The Wall Street Journal.
Another large investment house, LGT Capital Partners, said that Asia-focused hedge funds are focusing more heavily on China than on Japan.
“Considering Japan is the second-largest economy in the world and has had a free market for five decades, we wouldn’t have expected China to overtake so quickly,” White said. “The trend is gradually for most of them being based in Asia.”