Hedge Fund Intelligence Hong Kong 2014

HONG KONG 2014 KEY FACTS STRETCHED HUMAN RESOURCES Asian hedge fund assets, Dec-2013: by manager location Hong Kong Australia Singapore USA UK China Japan Other Asian hedge fund assets by location of manager: US$ billion Country 2008 2009 Jun# Dec# Jun Dec UK 22.69 17.30 10.29 11.86 USA 40.37 27.39 24.76 26.75 Australia 37.41 27.05 24.57 29.32 Japan 12.53 8.52 9.77 10.18 Hong Kong 33.46 22.18 27.42 31.12 China 1.03 0.62 0.62 0.47 Singapore 24.33 15.93 17.03 17.64 Other 3.71 3.44 4.30 5.14 Total 175.53 122.43 118.75 132.48 Source: AsiaHedge # adjusted 10 Special Report March 2014 2010 2011 2012 2013 Jun Dec Jun Dec Jun Dec Jun Dec 11.16 12.31 11.69 8.91 9.72 6.88 9.82 11.50 29.10 27.88 24.01 22.16 22.22 21.61 22.18 21.28 29.70 33.16 31.53 28.30 28.3 27.75 28.92 29.38 10.34 11.03 10.77 9.73 5.72 4.73 3.97 4.20 32.51 38.28 38.89 40.53 47.05 45.04 50.39 54.21 3.44 3.80 3.58 5.77 6.82 8.18 8.77 8.48 16.71 21.55 19.54 20.91 20.07 20.34 24.85 25.16 4.79 4.39 4.64 4.32 4.49 4.56 3.94 4.59 137.75 152.39 144.65 140.62 144.39 139.08 152.84 158.79 © HedgeFund Intelligence The resilience of Hong Kong’s hedge fund industry is especially impressive given the number of challenges that continue to weigh on its growth. One of these is a shortage of human resources. “A lot of people tell me that it is difficult to hire good people, especially at the back and middleoffice level, which is perceived to be the less glamorous end of the business,” says Tony Freeman. Freeman is executive director: industry relations of Omgeo, a specialist provider of automated solutions for post-trade operations, which is a wholly Harold Yoon, CIO, SAIL owned subsidiary of the Depository Trust >> Last year we achieved & Clearing Corporation (DTCC). very good balance There is also a lack of experience at the most between China and senior ‘C-suite’ level. “At the top echelon of management the talent pool is not particularly deep,” Japan managers >> says McNicholas at State Street. “If there is a shortage of people, it tends to be at the CFO, COO and chief compliance officer level.” This may be surprising given the depth, pedigree and sophistication of the financial services industry in Hong Kong. It is less so, however, given the relative immaturity of the Asian alternative investment management. According to Preqin, Asia-Pacific hedge funds represent less than 4% of the total capital invested in the industry worldwide. “There is a limited pool of high-quality talent in Asia, which is a function of the lifecycle and emerging nature of the industry where there aren’t as many second or third-generation hedge fund managers providing a deep bench of talent to draw upon,” says Credit Suisse’s Pradeep. That, she says, means that managers need to adopt an imaginative approach to recruitment of staff at the front and back-office level. “This is why many regional hedge funds are tapping into talent from investment banks and the traditional asset management industry, rather than relying solely on hiring from the buyside.” © HedgeFund Intelligence March 2014 Special Report 11

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