BEIJING, Jan. 14 — China will see a more favourable environment including more openness, liquidity and interest from the investing public – for the development of hedge funds over the next three years, predicts a US expert.
Hedge funds are a special type of mutual fund that can use one or more alternative investment strategies, including hedging against market downturns, investing in currencies or distressed securities, and utilizing return-enhancing tools such as leverage, derivatives, and arbitrage.
“Having discussed with the Chinese authorities, I believe that the consensus already seems to be developing that it is only a matter of time before hedge fund investing becomes a reality in China,” said Jeffrey H Tucker, founding partner of the Fairfield Greenwich Group (FGG), a leading developer and investor in hedge funds.
Currently hedge funds investing is forbidden due to concerns of its high risk and volatile nature. At the China Banking Regulatory Commission’s annual meeting held in December 2005, Chairman Liu Mingkang reiterated the government’s perception of hedge funds being one of the major forces behind the 1997-1998 Asian Financial Crisis. Yet he revealed that a special research committee had been set up looking into the ways of regulating the financial instrument in the China market.
