Focus on Asia – Gottex spells out reasons to be cheerful about Asian hedge funds

Investment Europe recently spoke with the Asia-based investment team at hedge fund allocator Gottex about their views on the region’s hedge fund market, end-client appetite, and South Korea’s move to boost its own alternatives industry.

Ronnie Wu (pictured), you were the head of Penjing Asset Management in Asia, which has been bought by Swiss-headquartered diversified asset manager Gottex. You are still with the combined firm. Have you invested in, or seeded, South Korean managers while at Penjing?

Penjing has invested in Korean dedicated fund since Penjing Asia Fund’s launch in April 2005 and plans to continue investing in South Korea.

South Korea’s regulator made it easier for local South Korean managers to start up funds, by announcing the relaxation of some rules last December. Are the changes helpful in your opinion?

Recently, South Korea’s Financial Services Commission unveiled a set of regulatory amendments which gives more leeway for onshore hedge funds regarding investment scope and leverage, and allows security firms to act as prime brokers for hedge funds. These measures would give greater bandwidth to local hedge funds and attract more talent into the local hedge fund industry.

From a country allocation stand point, outside of Japan, Hong Kong and Australia, Korea is a very important market given its depth and breadth.

Gottex-Penjing tends to favour hedge fund managers with a local presence. So for the Korean market, local Korean hedge funds typically have deeper on-the-ground company research, stronger access to corporates and local brokers, speak the local language and have a deeper understanding of the ebb-and-flow of the domestic equity markets.

Furthermore, under the new rules, onshore hedge funds will be relieved of certain investment restrictions currently faced by offshore hedge funds investing in Korea, which would widen the scope for offshore investors to take advantage of the full potential in Korean capital markets.

 

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