China’s soaring equities market — recently peaked at seven-year highs — is becoming a magnet for new hedge funds hoping to profit from its remarkable performance despite the sluggish economy.
Chinese hedge funds are also luring investors and employees away from other sectors of the country’s financial services industry.
According to the Financial Times, there were 12,285 private investment funds in China as of the period March-May, up from 7,989 in the previous three months. Their assets have also grown 17.3% to $433 billion during the period.
The surging Chinese stock market pushed up returns of China-focused hedge funds. According to Eurekahedge, funds with exposure in Greater China scored a spectacular 25.21% return in January-May, the best performer among the other indexes that it tracks.
Other financial services firms were losing their staff to hedge funds, which added more than 60,000 employees in the last three months, according to FT. Mutual funds were also losing their clients.
“More than half of our research team has left over the past year to join hedge funds,” the FT report quoted a vice-president for institutional business at a large Chinese securities brokerage in Shanghai as saying. “It’s the same with our [mutual fund] clients.
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