A report indicated that since China opened the hedge fund market, the industry has found it difficult to attract foreign investments. It was indicated that there were more than 20 foreign firms that had been given a license to run Chinese hedge funds, but the the country is struggling to reach a 0.2 percent increase in hedge fund assets.
According to Yahoo! Finance, foreign firms having a license to operate with private security funds garnered 5.8 billion yuan of assets in August of this year. However, it was revealed that the private-equity companies had similar-meaning characters which made it difficult to set them apart.
The Man Group's managing director for Asia Pacific ex-Japan Hersh Gandhi then said that the similarities of these private-equity companies make it challenging for foreign investors to build a brand in the country. It was also revealed that UBS Group AG's shared the same Switzerland origin from Credit Suisse Group AG. Thus, the report claimed that they have similar Chinese abbreviations which could lead to mix-ups.
He then added that they are currently building strategies that they can use in market segments and size their operations to fit that strategy.
When Man Group was asked for its opinion on the matter, the group did not disclose its current assets and profitability since they started operating in China. However, according to the ranges provided by PaiPaiWang, a tracker of hedge funds in China, UBS and BlackRock2 have an estimated rate of 100 million to 1 billion yuan each. On the other hand, Winton Group Ltd. was estimated to have about 2.5 billion yuan.
According to the director of the China Hedge Fund Research Center at the Shanghai Advanced Institute of Finance Yan Hong, the fundraising challenges are common in other financial markets. The report then indicated that foreign managers may be limited to making less than one billion yuan. This was said to be due to compliance and operational costs, Hong said.
In other news, Xinhuanet reported that the Chinese currency renminbi has strengthened to 36 to 7.0262 against the US dollar last Monday. Moreover, it was also noted that the currency is expected to rise or fall by 0.2 percent for each trading day for its foreign exchange market. The same expectation was said to have been anticipated for the China hedge fund.
The rate was taken from the weighted average of prices offered by the market firms against the US dollar before they opened the interbank market.
