Singapore Hedge Fund

Alternative asset management in Singapore

Singapore's sovereign wealth fund's $1.6 billion Profit on Citigroup

Looks like the buy and hold strategy worked out for Singapore’s sovereign wealth fund, after it notched a $1.6 billion profit on a partial sale of its Citigroup Inc. (NYSE:C) stake. The Government of Singapore Investment Corp., or GIC reduced its holding of Citi to 5% from 9%, exchanging its $6.88 billion of convertible preferred stock for Citigroup common stock, it said in a statement. The conversion price was $3.25 per share.

In addition to the sale, GIC can boast of a $1.6 billion paper profit on its remaining stake, according to Bloomberg.

Although Citigroup itself remains mired in toxic assets, GIC’s investment in the bank has fared far better than the investments of other sovereign wealth funds in the financial sector.

A different Singapore wealth fund, Temasek Holdings Pte., took a hit on the sale of its stakes in Bank of America Corp. (NYSE:BAC) and Barclays plc (NYSE:BCS). The Singapore government-controlled entity was Merrill Lynch & Co.’s largest shareholder with a 7.5% stake at the time it was purchased by BofA. Temasek had put $5 billion into Merrill at $48 a share between December and February, but a reset payment and additional $900 million averaged out the fund’s buy-in price to only $23.11 a share, based on Bloomberg calculations from exchange filings. Bank of America’s original stock offer came in at $29 a share, giving Temasek a $1.5 billion profit, but the markets weren’t kind to the stocks of either BofA or Merrill, which continued to fall before the deal closed, leaving Temasek’s investment in the loss column.

For its part, China’s sovereign wealth fund China Investment Corp. hasn’t been swayed by its investments in Blackstone Group LP (NYSE:BX) and Morgan Stanley (NYSE:MS) still being under water. The fund is doubling down on private equity, hedge funds and fund-of-funds investments in hopes of capitalizing in 2008’s drop in valuations. In spite of the fund’s $297.5 billion portfolio losing 2.1% in 2008, CIC said that it plans on investing $6 billion in hedge funds by the end of 2009.

In June, CIC put $500 million into a Blackstone hedge fund unit and bought another $1.2 billion of Morgan Stanley’s stock. The fund had famously paid $3 billion for a 9.9% stake in Blackstone right before the private equity firm’s 2007 IPO, only to see the value of its stake get crushed when the credit crisis set in and large LBO activity ground to a halt. CIC later increased its stake to 12.5%. Shares of Blackstone closed at $14.89 on Friday, off more than 50% from their IPO price of $31. Morgan Stanley currently trades at $32.53, topping the $28 to $31 range it saw in June. – From the deal

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Finance Jobs in Asia going back to boom time?

HONG KONG — Marco Wong lost his job with Citigroup in Singapore in mid-January. During all the turmoil that engulfed the financial world last year, the cutbacks at the U.S. banking giant were neither unique nor surprising.

Still, Mr. Wong says, Citigroup’s decision not to renew his contract shortly before it was due to end “came as quite a shock.”

But 20 job applications, four interviews and three and a half months later, Mr. Wong was again gainfully employed — as a financial consultant at IPP Financial Advisors in Hong Kong.

Asia has already emerged more forcefully from recession than the United States and Europe, economic reports over the past month have shown. Now, that upturn here is starting — at least tentatively and in certain sectors — to feed into the job market. Hiring is starting to pick up again, recruiters and bankers say.

Broad unemployment is still rising, a normal pattern even after economies begin to emerge from recession. But economists say that any early signs of job growth are a prerequisite for a more solid-based recovery — one in which more confident consumers, and not just huge government stimulus packages, can play a role in lifting the economy.

Perhaps the most striking element in the new hiring: Almost a year after Lehman Brothers folded — roiling financial markets, spurring a remake of the banking landscape and feeding one of the worst recessions in modern history — it is the financial sector that is leading the way.

“The death of the industry has been greatly exaggerated,” said Matthew Hoyle, founder of Matthew Hoyle Financial Markets, a specialist headhunter for the banking and hedge fund industries, based in Hong Kong. “I am actually quite excited about the prospects for the rest of the year.”

“Things have picked up here — unlike in Europe and the U.S., where that’s absolutely not the case,” he added.

To be sure, the recovery in Asia is tenuous, and highly dependent on a recovery in the West, a major market for the region’s export-driven economies. But for now, the picture is brightening.

Jerry Gunnell, a corporate cash management specialist in Singapore, fell victim to Bank of America’s headcount reductions in February. He is now back in the saddle at Standard Chartered, a British bank that does much of its business in Asia, in a somewhat different but equally senior position he took up in mid-June, also in Singapore.

In the past month, several banks have announced plans for some serious hiring in Asia.

Standard Chartered intends to hire about 850 relationship managers for its consumer banking business over the next 18 months, to gain a larger market share of affluent customers in Asia.

HSBC — which, like Standard Chartered, is very active in Asia — is recruiting more than 100 staff members in Hong Kong. In mainland China, it plans to add 1,000 employees this year, and a similar number next year.

Bank of New York Mellon recently announced it would increase its 150-strong Hong Kong staff by another 50 as part of its expansion in Asia.

And ANZ of Australia, which recently bought some Asian operations from Royal Bank of Scotland, the battered British lender, is hiring 100 senior private bankers in the region over the next 18 months.

Several others, including Citigroup, Nomura, Barclays Capital, Credit Suisse and BNP Paribas, have announced new hires and appointments in recent weeks.

Tales like these highlight the newfound dynamism that is starting to creep back into the Asian job market. While unemployment continues to rise in much of Europe and is expected to top 10 percent in the United States before any improvement materializes, rates in Asia have remained relatively low: 5.4 percent in Hong Kong and 3.3. percent in Singapore.

One relatively weak spot is Japan. The jobless rate hit a seasonally adjusted 5.7 percent in July, the highest level since the end of World War II and up from 5.4 percent in June.

But elsewhere, recruitment firms are busy again.

“Last October, after Lehman Brothers collapsed, the lights went out here; it was really quite frightening,” said Nigel Heap, managing director for the recruitment firm Hays in Sydney. “But we’re now cautiously optimistic that the worst is over in places like Hong Kong and Singapore.”

Andrea Williams, managing director of Ambition, a headhunting firm in Hong Kong, said that things started to turn noticeably from April onward.

“During the second quarter of this year, we got in 20 percent more jobs than during the first three months of the year,” Ms. Williams said. “Yes, we’re still below where we were a year earlier, but it’s definitely encouraging.”

A survey in August by Robert Walters, a recruiting firm based in Singapore, showed that job ads in the Hong Kong, Singapore, Chinese and Japanese media nudged up 6.4 percent in the April-to-June quarter from the previous three months.

Of course, for the legions of those who lost their jobs and still remain unemployed, or who are still being laid off as some companies continue to struggle, it is too early to celebrate.

“It’s not an across-the-board improvement — it’s pretty patchy in terms of sectors, and in terms of geographies — but things are at least holding steady or even getting better in some parts,” said Darryl Green, who heads Asia Pacific and Middle East operations for Manpower, a temporary employment and recruiting company.

“On a scale of 1 to 10, I’d say we were negative during the first half of the year,” he said. “Now, we’re at 0.5 or 1 — not huge, but better, and definitely stronger than in the Americas and Europe.”

Nearly all of the jobs that are coming back are “replacements” of previously cut positions, not new jobs, market experts here say. And employers are still being very cautious and choosy when it comes to hiring.

But increasingly, the champagne is coming back out, as Asia’s economies and stock markets are recovering — faster than expected, and faster than Europe and America.

Demand in the financial sector is strongest for back-office positions like compliance and accounting, as well as client relationship and asset management — a business in which many banks want to expand to tap the growing number of increasingly wealthy Asian savers.

Hedge funds, too, are again looking to increase staff, said Mr. Hoyle in Hong Kong. “A lot of the big U.S. hedge funds retrenched — they are regretting it now.”

Outside the financial sector, there is anecdotal evidence of hiring in other areas, though it is patchy.

Demand for sales jobs, for example, has picked up across all sectors as companies focus their still scarce resources on jobs they hope will help generate immediate revenues.

“Asia is seen as a growth market,” said Mark Ellwood of the Robert Walters recruitment agency, in Singapore. “Companies are not going out all guns blazing again, but there is once again an appetite to hire in certain areas.”

In Hong Kong, Eike Croucher, a communications manager, was laid off from Swiss Re after the reinsurance company announced in April that it would shed 10 percent of its 11,500-strong global work force. Mrs. Croucher had a job offer from the German chemicals giant BASF on the evening of her last day at Swiss Re, thanks to some fast networking.

“I was very, very lucky, of course, that things happened so quickly,” she said.

In another example, one senior marketing executive who lost her Singapore-based job with a large U.S. software company, had been in the region for four years. The woman, who spoke on condition of anonymity because she was not authorized to talk to the media, found a job at another U.S. company in the same sector. It took 7 weeks of research, 45 applications and a dozen job interviews.

It is still very much an employers’ market. Generous “expat packages” — in which overseas employees have much of their housing and their kids’ schooling paid for — are for many a thing of the past.

The most successful candidates have experience in Asia, a network of contacts and language skills. It is difficult for someone to just pack up and move over from New York or London, where the market remains much gloomier.

“Employers are still being extra, extra selective in their talent search,” said Mark Carriban, the Asia managing director based in Hong Kong for Hudson, a recruiting agency. “And what is very prized out here is local market knowledge.”

In fact, many recruiters are already starting to warn that a “talent crunch” could be only months away, with companies again struggling to find people with the right combination of international qualifications, contacts and languages — of which there is a limited supply.

One piece of advice for job seekers, though easier said than done: “Learn Mandarin,” Mr. Carriban said.

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Asia Hedge Funds on ‘Radar’ After Beating Peers, Citigroup Says

Asian hedge funds are attracting growing interest from investors as managers focusing on the region outperform global peers, said Andrew Hill, director of prime finance for Asia-Pacific markets at Citigroup Inc (C:NYSE).
There are pockets of proprietary money looking to be put to work in Asia, Singapore-based Hill said in a June 12 interview. There is going to be an outsized investment back into Asia. Some of the big pensions are going to be looking at Asia; it’s coming onto the radar screens.
Asia-focused hedge funds gained 12.4 percent in the first five months of the year, outpacing returns in the U.S. and Europe, according to Eurekahedge Pte. That’s a reversal from last year, when clients withdrew almost $24 billion from the region’s hedge funds as managers posted bigger losses than global peers, the Singapore-based industry data provider reported.
We don’t see money rushing back in yet, but there’s certainly a level of dialogue that’s picking up, Hill said. It’s both for existing managers with capacity and newer ones with solid business plans and institutional infrastructure.
Investors are allocating small amounts in Asia and getting their feet wet in anticipation of a faster economic recovery in the region than in the West, said Alex Mearns, chief executive officer at Eurekahedge.
Economies in the Asia-Pacific region may expand 4.3 percent in 2010, compared with no growth in the U.S. and a contraction of 0.4 percent in the euro-area economy, according to the International Monetary Fund.
‘Potential Growth’
European and U.S. investors should allocate money to Asia to capture potential growth not available in their home countries, said Frank Brochin, managing director at New York- based StoneWater Capital LLC, which invests about $100 million in Asian hedge funds.
It makes sense for them to invest in Asia through on-the- ground managers able to identify companies capable of delivering significant growth over long periods of time, Brochin said.
The firm favors Asian managers that bet on rising as well as falling stocks, in particular those that have a majority of their bets on rising shares, he said.
An index tracking Asia-focused long-short funds rose 9.3 percent last month, the best performance of nine groups followed by Eurekahedge, after the strategy slumped 22 percent last year. About 180 funds closed in the region during last year’s global market rout.
A solid market for stock picking is coming back, said Citigroup’s Hill. Many of the trading-oriented strategies continue to do well. There’s a lot of opportunity out there and it’s less crowded.

From Financial 24

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