Wall Street Journal- Hedge funds, known for flexing their financial muscles around the globe but still largely shut out of China, hope the quickening pace of Beijing’s reformswill open new gateways into the world’s fourth-largest economy.
Chinese officials remain suspicious of overseas hedge funds, after witnessing the turmoil partly blamed on the likes of financier George Soros’ Quantum Fund during the 1997/98 Asian financial crisis.
Unlike foreign banks, mutual funds and brokerages, hedge funds are excluded from forming fund management ventures in China, which Barclays Capital predicts will offer the highest growth potential of any asset management market in Asia over the next two years.
With foreign exchange reserves of US$1.2 trillion (HK$9.36 trillion) and personal savings estimated at US$2 trillion Beijing also bars domestic investors from buying into hedge funds, although it has let selected China-based financial firms invest in overseas capital markets.
