Chinese hedge funds could shape global industry, says CFA Asia-Pacific head

21 July 2014   Category: News, Asia, China, Global   By Asia Asset Management

China’s burgeoning hedge fund industry has the potential to rival that of the US and become one of the world’s largest, according to the regional head of the CFA Institute.

Paul Smith, managing director of CFA Institute, the financial professional organisation’s Asia-Pacific operation, said that the Chinese hedge fund market has been valued at about US$40 billion, making it the largest in Asia. While the MSCI China Index remained flat last year, hedge funds investing in Greater China gained an average of 20%.

“It’s growing very rapidly, although not many people focus on it because it’s entirely domestic at the moment in terms of its investments and also in terms of the investors within it,” Mr. Smith said during a CFA Institute event in Hong Kong. 

“We believe though, as do our members in China, that the hedge fund industry is going to be a driver of not just the Asian hedge fund industry, but the global hedge fund industry over the years to come.”

Mr. Smith’s comments came as the CFA Institute prepares to host its ‘China Investment Conference: Rise of the Hedge Fund Industry’ in Shanghai on August 2. The conference, of which Asia Asset Management is a media partner, will discuss major trends, potential opportunities, and risk factors affecting Chinese hedge funds.

Speakers include Nobel Laureate Myron Scholes; Lumen Advisors principal Dr. Aaron Low; Apollo Global Management’s founding partner in Asia, Tan Chin Hwee; Goldman Sachs chief investment strategist Dr. Jiming Ha; and China Universal Asset Management chief executive officer Andy Lin.

Mr. Smith said that in its present state, China’s hedge fund market resembled that of the US industry during its salad days 30 to 40 years ago. “It’s very similar and largely unregulated with lots of pockets of high-net-worth individuals, who really have no credible investment alternatives. So, the hedge fund industry for them represents an opportunity to increase their own market. The regulatory environment in China is also obviously very benign, which is interesting,” he commented.

The CFA Institute currently has around 3,000 charterholders in mainland China, with one society in Beijing. Mr. Smith said that it planned to shortly open societies in Shanghai and Shenzhen, as well as an institute office in the Chinese capital. He added that the examination currently sees about 35,000 Chinese candidates per year, compared to around 50,000 annually in the US. The top employers of CFA charterholders in China are ICBC, CICC, Bank of China, HSBC and Citic Group, respectively, Mr. Smith said.

He said that the decision to host the Shanghai conference came on the back of rising interest in hedge funds among China’s domestic investment community. “It’s a big conference for us. China, it will come as no surprise, is a big market as far as the CFA Institute is concerned and the hedge fund industry is a particularly hot topic. We’re building this one-day conference around the Chinese hedge fund community and the rise of that,” Mr. Smith explained.

The China Investment Conference will be held on August 2 at the Jumeirah Himalayas Hotel in Shanghai. The event is targeted at a broad spectrum of investment professionals, including: chief investment officers; portfolio strategists; private bankers; risk managers; brokers; and financial advisers.

For more information or to register attendance, click here.