Singapore Hedge Fund

Alternative asset management in Singapore

Singapore consults hedge funds on stricter regulations

From the Wealth Bulletin, news that Singapore’s central bank is holding informal talks with hedge fund executives on ways to toughen up the regulatory regime for the city-state’s growing alternative investment sector, according to a report in the Financial Times.

Industry sources say ideas being deliberated upon in the discussions include the introduction of minimum requirements for asset size, professionally qualified employees, working capital and professional indemnity arrangements.

Wealth Bulletin

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Boris tries to save london's first place!

Boris Johnson

Boris Johnson

Mr Johnson was there to argue against “enormously damaging” plans to tighten regulation, saying that it would drive jobs in the capital elsewhere and cost the UK billions in tax revenues as business relocated to other financial centres such as New York and Singapore.

“After a series of meetings I am confident we have successfully made a concrete and sensible argument,” the Mayor said. “Amongst the British MEPs I met, there was widespread recognition of the potentially damaging effect that the directive, in its current form, will have on London, the UK and Europe. I was encouraged by MEPs to continue to lobby for the modification of the directive.”

Mr Johnson said that he had a “very friendly, warm and constructive” meeting with Charlie McCreevy, the EU Commissioner responsible for the regulation of financial services.

“Commissioner McCreevy realises the importance of the capital’s financial services industry to London, as well as Europe, and recognises that the directive will be, and should be, amended as it makes its journey through the European Parliament. He encouraged us to continue to play our part in this process and I fully intend to do so,” the Mayor added.

He has maintained throughout that the draft directive is unduly harsh on hedge funds and private equity, which he says were not to blame for the financial crisis. He said he is in favour of “proportionate regulation” but argued in its current form it would cut off a vital supply of investment funding from an industry which currently employs 7,000 people directly in private equity in London and a further 35,000 directly and indirectly within hedge fund management. About 80pc of European hedge funds and 60pc of European private equity funds are located in London, according to the Mayor.

The Alternative Investment Fund Management draft directive was published by the European Commission in April. Mr Johnson has dismissed the plans as protectionist and anti-competitive, and claimed they display ignorance about the workings of the industry.

He has argued that the correct thing to do would be to regulate at the global level through the G20.

JVB with the telegraph

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New Asia-focused team at FrontPoint

FrontPoint Partners hired a new Asia-focused event-driven and special situations hedge fund investment team, led by portfolio manager John Foo.

The Singapore-based team all came from Kingsmead Capital Advisors, which Mr. Foo founded.

Joining him is Edgar Chia, analyst, and Hubert Yong, trader; they held similar positions at Kingsmead Capital, according to a FrontPoint news release.

Kingsmead Capital liquidated its similarly managed Asian hedge fund in July 2008, said Erica Platt, a spokeswoman for FrontPoint’s parent, Morgan Stanley Investment Management.

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AIMA Singapore: Draft European Directive on Alternative Investment Fund Managers could significantly impact Singapore’s hedge funds

From Opalesque, some potentially bad news for hedge funds in Singapore.   The Singapore Branch of the Alternative Investment Management Association (“AIMA”), the industry trade association for hedge funds, warns that the European Commission’s draft directive on Alternative Investment Fund Managers will make it unduly difficult for Singapore based alternative investment managers to access the European market. The directive will also complicate the allocation of a global portfolio’s fund management, making the delegation from Europe to Asia near impossible.

Under the directive, managers based outside of Europe will need to obtain a special marketing passport before being granted access to the European market. However, the passport will not be available for three years after the introduction of the directive. Significant obstacles to acquiring the passport will also be imposed; regulatory equivalence between Europe and the applicant’s home jurisdiction will need to be established, key criteria include comparable prudential legislation, equal access to markets, and a tax information-sharing agreement. Capital requirements and leverage restrictions will also need to be implemented. Local regulations will need to be effectively adjusted in manners outside current discussion in international regulatory forums.

The proposed directive will apply to all types of “non-UCITS funds”, including private equity, real estate, infrastructure, and hedge funds.

Michael Coleman, the Chairman of the Singapore branch of AIMA, commented: “The effect, if not the intent, of this directive is highly protectionist. If it is left unchanged it will have a major negative impact on the hedge fund industry in Singapore, which has a large European component to its investor base. Also, it will have negative consequences for European investors who will find their choice of investment opportunities severely restricted. ”

This will have an adverse impact on Singaporean investors with European funds or managers. Due to the restrictions imposed, compliance costs will increase and returns will lessen. European investors will also suffer from the higher costs passed on to them and face a diminished investment universe.

Opalesque

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Most hedge funds failed to make money in June

From Reuters, Singapore.  Most strategies employed by hedge fund managers globally failed to generate positive returns in June as stock markets moved sideways and commodity prices slid during the month, according to estimates from Lipper on Tuesday.

The best-performing hedge fund strategy was “convertible arbitrage” which returned 0.28 percent, while the worst-performing strategy was “managed futures” which lost 1.59 percent. Long/short equity hedge funds declined 0.23 percent.

Overall, nine of the 13 strategies tracked by Lipper lost money last month.

“Managed futures managers were hit in June by the lack of a clear trend as intra-month volatility spikes resumed across a number of asset classes,” Lipper’s global head of hedge fund research Aureliano Gentilini said in a report.

Commodity prices fell in June, with the Reuters/Jefferies CRB Index .CRB declining 1.22 percent, as gains in industrial metals and energy were offset by losses in agricultural, soft commodities and precious metals, said Lipper, a unit of Thomson Reuters.

Hedge fund managers have come under increased scrutiny since last year due to their failure to generate positive returns in bear markets as they are supposed to, resulting in outflows from the industry. Many observers say, however, that withdrawals are easing and managers could see inflows before the end of 2009.

Strategies used by managers include arbitrage, which typically involves exploiting different valuations of what is essentially the same underlying security such as the price of a stock and its price in the forward market.

Managed futures traders, on the other hand, focus on trading futures contracts in areas such as metals, grains, stocks and currencies.

Reuters

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Singapore Offshore Banking

Here is a good piece I found on mrxpat.com about law, regulation and banking in Singapore…

Singapore has double taxation treaties with more than 40 countries, including Belgium, the Netherlands and Luxembourg. . This makes it an interesting place to set up a holding company. . A European entrepreneur who brings his business in a Singapore holding company can enjoy a much more favorable tax regime.. The cost of setting up a company in Singapore soon amount to several thousands U.S. $.  Singapore is located in the heart of Asia, and is the largest banking center in the region. The infrastructure is among the best in the world with digital telecommunications, and a world class airport.  The banking laws are strict and Singapore is a huge success as a center for offshore funds. The regional property market relies more and more in Singapore. thanks to a good legal high skilled labor and tax benefits.  Trusts are less in use, but Singapore would change and offshore trusts are not taxed. In 2003, the tax reform, new tax incentives for investment funds, insurance companies and damage the futures market.  The business tax was reduced as both simplified and tax abolished. A real business transaction, however, settled by means of shares, is normally charged. Singapore also known wealth, customs duties, stamp tax and social contributions. The number of disks for personal income tax was reduced from 10 to 7, and the highest disc is dropped to 20%.  Company tax was 1% down to 32%. The government estimated the cost of these measures in more than 600 million singapore dollars. tax system operates on a territorial basis, meaning that income from offshore investments that are not returned to Singapore, are not taxed.

Companies in the financial sector also enjoy tax exemptions or lower rates for offshore. Banks and insurance companies pay scale 10% tax on offshore activities instead of 32%, except for life insurance. Also custom switching trust companies and trade in bonds enjoy the lower tax regime, and there are tax incentives for their data processors.  Interest on loans from foreign banks and companies can be deduced. In some years, the number of hedge funds in Singapore tripled. Eighty percent of the investment in a hedge fund should come from outside Singapore to qualify for tax exemption. . Managers of a hedge fund are taxed at 10% of their fee. Leaders in the sector, the government asked those rules ensuring a favorable climate for hedge funds to continue to insure. Since 2004, international investment funds no longer required to have an office in Singapore.  They can do business through a bank. Managers of more than S $ 5 million, for a period of five years exempt from tax on their fees. If the activities of the fund in Singapore to grow enough, this period for another five years. Tax on profits of the fund can be deducted from the 20% of dividends paid to shareholders are taxed. Gains made by financial firms for their clients are in many cases tax. Singapore’s competitors in the field of financial services in the region, Tokyo and Hong Kong, where rents the highest in the world. Singapore hopes some of their customers to attract a lower price. It was in this context that the government decided to make an exception to the territorial tax principle and the advantage as long as parties are foreigners, trusts completely exempt from tax.

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Tribridge To Launch New pan-Asia Hedge Fund

Tribridge Investment Partners Ltd., a Hong Kong-based hedge fund manager, said Monday it will launch a new fund in August and hired John Liptak, former head of Bank of America Corp’s Asia special situations group, to run it.

The new fund will have a pan-Asia focus and seek to identify mispriced or undervalued securities due to financial stress, some corporate event or other special situation. It will be biased toward large-cap companies in more developed markets in the region such as Hong Kong, Australia, Korea, Singapore, or Japan.

“I believe that the opportunities from the upcoming default cycle have not been seen since shortly after the Asian currency crisis back in 1997-1998,” Liptak said in prepared remarks.
Citigroup. is the fund’s prime broker and Bank of New York Mellon Corp. is the administrator. Tribridge, founded in 2003, has US$259 million in assets under management in four different funds including a Korea multi-asset fund and three credit funds.

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