Hedge Fund Intelligence HFI Hong Kong Report April 2014 | Page 8

OVERVIEW HONG KONG 2014
OVERVIEW CHINA 2013

HONG KONG 2014 OVERVIEW

the dominant location for managing Asian hedge fund assets – cornering
a 34% market share of the Asia-Pacific industry with $54 billion of the
$159 billion total assets in Asian hedge funds at the end of 2013.
That represented a year-on-year growth rate of 20% on the $45 billion in
hedge fund assets that was managed out of Hong Kong at the end of 2012.
Australia is the next-largest hedge fund location in the region, with $29 billion,
while Singapore’s assets under management grew by almost 25% in 2013 to
top $25 billion by year-end.
Above all, however, Hong Kong has a backyard called China. True, economists, investors and other commentators have become increasingly jittery
about the outlook for the Chinese economy – with scare stories abounding
about its shadow banking industry, for example, and the potential for a
credit collapse.
But the long-term potential of a country with a population of 1.36 billion
people remains mesmerising. According to the latest CapGemini/RBC Wealth
Management survey, in 2012 that population included 643,000 high-networth individuals (HNWI) with assets of $3.1 trillion, which is more than a
quarter of the entire HNWI wealth sloshing around the Asia Pacific region.
In 2014, China-focused hedge fund managers continued to prosper in spite of
another disappointing year for the Shanghai Composite Index – which fell by
6.8% in 2013, making it Asia’s worst-performing stock market last year.
“Long/short Chinese equity was an attractive strategy last year,” says Candy
Cheung, portfolio manager at SAIL Advisors in Hong Kong, a fund of hedge
fund manager which, as of January 2014, had $2.3 billion of assets under management across its five funds – two global strategies and three specialised Asia
and emerging-manager products.
“MSCI China was flat, while the A and H share markets were down about
8% and 5% respectively,” Cheung adds. “But our long/short China hedge
funds were on average up about 22%. A lot of that was due to the transformation of the Chinese economy, which has created a number of clear winners
and losers. There has been a lot of alpha to be made by managers focusing
not just on the beneficiaries of China’s economic transformation but also
on those identifying the right single names to short, because the ability to

short has improved considerably in recent years.”
None of the China funds soared to the heights
achieved last year by the Avant Capital Eagle Fund,
a long/short Greater China equ