Hedge funds build in investment hot spot (hktdc.com)


	Hong Kong's financial district, home to all the major investment banks, is a hive of hedge fund activity in Asia

Hong Kong continues to be a hot spot of investment for overseas firms looking to tap the Asian hedge fund market. The latest to arrive is Financial Risk Management (FRM), a global hedge fund group, with US$15 billion under management.

Blaine Tomlinson, founder and Group Chairman of FRM, said the Hong Kong office, which opened in June, would strengthen FRM's research coverage of Asian hedge funds and provide enhanced client service for its growing base of investors in the region.

The firm believes it is essential to maintain a research presence in all regions where compelling hedge fund investment opportunities exist.

"The Asian hedge fund industry is undergoing rapid growth in both size and quality, as structural changes in Asian markets are creating a rich opportunity for investors," Mr Tomlinson said.

Pan-Asia coverage

"Our new Hong Kong office will complement our long-established hedge fund research presence in London, New York and Tokyo and significantly strengthen our coverage of Asia.

"We anticipate increasing our allocations to Asian hedge funds. Our newly launched hedge fund-seeding business, FRM Capital Advisors, is also seeking to invest in new managers in the region."

Company CEO Paul Dunning added that the firm is capitalising on an emerging global trend towards increased institutional investment in hedge funds. "We are making a significant investment in resources to serve more Asian institutions and major distribution partners, as they increase their hedge fund allocations," Mr Dunning said.

With the growth of hedge funds in Asia comes a need for more manpower. Global executive search firm Whitney Group said demand for financial services talent has increased exponentially in the region, particularly among hedge funds setting up in Hong Kong. Although the peak of activity experienced late last year has eased in 2008, FRM Director Russell Kopp said that offshore hedge funds with no presence in Asia "still appreciate that this is the place they need to stick their toe in."

Hong Kong a clear choice

"Those funds that have not yet pulled the trigger just felt it wasn't the right time, given broader market conditions," Mr Kopp said. He added that when they do make a move, Hong Kong will be an obvious choice.

"From a sell-side perspective, Hong Kong is the centre of the world in Asia. All the investment banks are run from here, the ECM (Equity Capital Markets) desks are here, more sales guys are here – so you can get a better service in Hong Kong."

Hong Kong is also set to host Hedge Funds World Asia 2008, the region's premier hedge fund conference. More than 700 managers and investors from at least 35 countries will gather, 8-11 September, at the Hong Kong Convention and Exhibition Centre to explore new opportunities, hot issues and innovative investment themes in Asia-Pacific markets for fund managers and institutional investors.