Morning Coffee: Want an Asian hedge fund job? Brush up on your Mandarin, exotic strategies

Now would appear to be a good time to be contemplating a move into Asia’s hedge fund sector. The region’s hedge funds increased their assets to a record US$177bn in May, according to Singapore-based data provider Eurekahedge.

Buy-side recruiters in Asia aren’t seeing a region-wide boom in the sector, though. Instead they say it’s mainly China-focused firms that are looking to expand their headcounts, mainly by hiring Mandarin speakers who understand the mainland’s stock markets. This trend is reflected in asset growth. “China is the shining star in terms of returns,” Alexander Mearns, chief executive officer of Eurekahedge, told Bloomberg.

China’s market capitalisation has almost doubled to US$9.6 trillion this year, boosting the income of hedge funds investing in the country. The Eurekahedge Greater China Hedge Fund Index has gone up 25% this year, helping make hedge funds in Asia among the best performers globally. Recent stock market falls in China – the benchmark Shanghai Composite dropped more than 13% over the course of last week – threaten to put some of these gains at risk. “If there is a correction, that will definitely affect the equity long-short hedge funds investing in the market, especially those that have not capped their downside risk,” Melvyn Teo, professor of finance at Singapore Management University, told Bloomberg.

The proportion of long-short equity funds is falling in Asia, however, as the sector matures and pivots towards more exotic strategies. They represented about 70% of all funds investing in the region in 2002 but only make up 39% today, according to Eurekahedge. By contrast, multi-strategy funds now account for 22%, up from 14% in 2007, while the share of macro funds rose from 6% to 10% over the same period.

Meanwhile:

European banks head to Asia amid $1 trillion capital shortfall. (Bloomberg)

China Securities Regulatory Commission fires official for alleged irregularities. (Reuters)

Hong Kong exchange mulls dual share structures with safeguards. (South China Morning Post)

London Stock Exchange given licence by Hong Kong market regulator SFC. (South China Morning Post)

Hong Kong fathers spend only 30 minutes with their kids a day, working hours partly to blame. (South China Morning Post)

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