More Hong Kong Hedge Funds Expand Into Singapore
SINGAPORE – A Bloomberg News analysis of corporate registry data showed that at least 16 hedge funds operating in Hong Kong have opened an office in Singapore in 2019 and 2021, a more than 3-fold increase from just 5 in the preceding three-year period, reported Bloomberg on Friday morning (2 December, SGT).
Among those that ventured into the city-state are some of the world’s biggest money managers like Citadel, Marshall Wace, and D.E. Shaw & Co, as well as smaller regional peers such as Trivest Advisors and Ovata Capital Management.
While Hong Kong continues to be the region’s dominant hedge fund hub as it houses almost 44 percent of hedge fund managers operating in Asia as per Preqin data, Singapore has become an increasingly vital location for hedge funds that have adopted investing strategies that are not solely focused on China.
For instance, Singapore is historically positioned as a tax-efficient base for investments into India thanks to a bilateral treaty. The city-state is also considered the gateway to the ASEAN region, particularly fast-growing markets like Indonesia and Vietnam. Additionally, affluent families are increasingly establishing family offices here, which in turn provides a deep pool of capital that can be tapped by hedge funds.
Singapore serves as a “prime springboard” for expansion, explained Kher-Sheng Lee, who is the Co-head of multinational trade body Alternative Investment Management Association for Asia Pacific. “Some firms pursuing pan-Asian or China plus one growth strategies are beginning to see India and Indonesia as crucial.”
According to Bloomberg’s analysis, the largest single surge hedge fund arrivals in Singapore was in H2 2019, when Hong Kong was seeing months-long political protests that have led to business suspensions. Back then, lawyers and consultants reported rising numbers of enquiries about how to start offices elsewhere.
“There is definitely an increase in firms setting up in Singapore,” said ComplianceAsia Consulting’s Founder. “Managers realised that they needed better business back up plans and the best solution to that is to have two offices in different places.”
Although the pace of new hedge fund openings in Singapore has slowed since 2020, the inflow of money continues to increase. Hedge fund assets under management (AUM) here rose by 30 percent year-on-year to S$257 billion (US$188 billion) in 2021, the largest dollar increase on record, as per data published by the Monetary Authority of Singapore (MAS) in October.