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Developing markets ideal for hedge funds

Gulf Daily News – Developing markets are fertile ground for hedge funds, if the funds have experienced managers, according to Paulson and Company founder and chief executive officer John Paulson."Underdeveloped markets are less efficient and create more opportunities," Mr Paulson said in an interview in the forthcoming issue of The Report Bahrain 2008.

"In markets such as London and New York, which are very efficient, the arbitrage opportunities are very thin. However, in developing markets, the arbitrage opportunities are greater. A developing market could benefit from an experienced manager who is able to navigate the market to create value for investors."

He outlined many of the hedge fund strategies, and pointed out that, for GCC hedge funds, underdeveloped debt markets should not pose an obstacle as hedge fund managers can focus in the areas where there is sufficient liquidity.

Mr Paulson said that, with the hedge fund sector among the fastest growing industries in the world, there was a demand from many investors from outside the Gulf region to diversify and invest in promising areas of the world.

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