Hedge Fund Intelligence HFI Hong Kong Report April 2014 | Page 20

HONG KONG 2014

HONG KONG 2014

Prime brokers caution, however, against assuming
that practices that may be generally accepted in the
US and Europe will necessarily be embraced in Asia.
They say that there is a wall of money looking for a
home in the region, much of which is inevitably
flowing towards a handful of the China-based
specialists that have been spectacularly successful in
generating alpha in recent years. That is allowing
some of the top China managers to dictate their
own terms on reporting and transparency standards, as well as on pricing.
McNicholas at State Street recognises the significance of this challenge. “It’s true that many of the
funds’ HNW and private bank investors may not see
the need for robust operations and improved compliance,” he says. “But our challenge is to convince
them that if they are going to raise institutional
funds and become true global asset managers they
will quickly find that investors will demand an extra
level of compliance and operational infrastructure.”

Tony Freeman, executive
director: industry relations
of Omgeo
>> The biggest increase in
investment in Hong Kong
hedge funds is coming
from institutional
investors, including
ONSHORE/OFFSHORE CONVERGENCE
sovereign wealth funds
On the face of it, the holy grail for investors in Hong
from Japan, China,
Singapore and Australia >> Kong-based China funds is the combination of
local expertise, on-the-ground research capability

the sparklingly successful outfit led by Lin Yujin, which was the subject of a
recent Financial Times piece that described the manager as “highly secretive”,
a description few would contest.
Prime Capital closed its Greater China long/short equity strategy, the Dragon
Billion China Fund, to new investors in early 2011 with assets of some $1.4 billion.
That represented a meteoric rise for a fund that in 2008 had about $300 million.
But with growth in AUM, say some, came an apparent erosion in transparency
standards. “We were initially getting reporting with a one-month lag, then with a
three-month lag and then with a six-month lag,” says
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