Hands down, Hong Kong is Asia’s reigning hedge fund leader. According to the first-ever survey of the industry by the Hong Kong Securities and Futures Commission, 43% of all Asian HF start-ups were in town, with rival Singapore attracting 17%, Japan 21% and Australia 19%. Based on the survey, the actual number of hedge fund managers has more than doubled since 2004 to 118, and assets under management for firms located there has skyrocketed 268% over the same period. HF managers are getting bigger, too, as 46% of the total handle assets of more than $100 million, up from 34% in 2004. The survey also found that only 35% of the largest HF managers are local start-ups, while 65% of them are affiliates of firms in the U.S., U.K. and Japan. One in five hedge funds returns 20% or more a year, while 16% end the year in negative territory, according to the SFC survey, noting that 40% of those polled did not use any leverage, while most of those that did had a leverage of under 200% of their net asset value. Hong Kong’s explosive growth, according to Martin Wheatley, the chief executive of the SFC, can be traced to the fact that China, which is being flooded of funds, is in the city’s backyard, and its hedge fund user-friendliness: Hong Kong, says HedgeWorld, has a simple tax structure and good financial infrastructure – and it’s determined that regulating HFs is impractical so it has decided not to “seek to register, license or authorize private hedge funds.”
