The use of financial futures and developments such as cross-border investing, which have risen rapidly in China in the past five years, will continue to expand rapidly, a report examining the hedge fund industry and its prospects in the Asian giant says.
A report called Hedging the Dragon examines the Chinese hedge fund industry and details the opportunity for foreign hedge funds to enter the market providing insight on the market opportunity itself as well as some of the market entry options and key considerations for foreign funds as they consider the market.
“With the world's second largest economy, China is an attractive market for nearly every corporate, financial institution and fund, but because of stringent regulation, capital controls, and lack of desirable instruments / products, mainland China has previously been a 'maybe tomorrow' opportunity for many hedge funds,” the report, published by Research and Markets, says.
“Yet, if 2001-2010 could be considered China's 'banking reform' years, 2010-2020 is shaping up to be the 'capital market reform' years,” it says.
“Take the actual reform along with the prolific announcements from the government and regulators on future reform, and it appears that 2013 is turning out to be the year of the hedge fund as existing private funds re-trench as more traditional hedge funds and new funds seek to enter,” it continues.
Key questions regarding the hedge fund industry include:
-- What are the key investment opportunities for hedge funds in China today?
-- What are the implications of the new fund law for hedge funds?
-- Which opportunities are hedge funds currently in the market missing?
-- How will regulation affect the market in the next 5 years?
-- If a fund is looking to enter the market, what are the key steps and challenges and how should they overcome them?