China should legalise hedge funds and bring in more private equity funds in order to develop the country’s futures market, a Beijing-based university professor has argued [via Bloomberg].
Professor Hu Yuyue, head of the stock futures research center at the Beijing Technology and Business University, made the call at an investment conference in Beijing yesterday.
“The futures market is plagued by a small range of products, limited size and the dominance of retail investors,’’ said Hu. “Individuals don’t understand well the risks involved in trading futures. We need institutional investors like hedge funds to drive the market.’’
Overseas funds are currently allowed to set up representative offices in the country, Bloomberg reported, but those offices can only conduct market research and are banned from placing any trading orders. Funds focusing on China typically register in another jurisdiction, such as Hong Kong.
