Singapore Hedge Fund

Alternative asset management in Singapore

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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Singapore keeps top spot in expat survey, HK slips

Good news for the weekend from Reuters for those living in Singapore.  It has retained its status as the best location for expatriates in Asia while Hong Kong has fallen behind Tokyo because of bad air pollution, an annual survey released on Wednesday shows.

Singapore was ranked the best location for the 10th straight year, followed by Japanese cities Kobe, Yokohama and Tokyo, according to the survey by London-based ECA, which ranks cities by climate, air quality, health services, housing and personal safety, among other categories.

“Good infrastructure and healthcare facilities, low crime and health risks, and decent air quality contribute to Singapore providing the best quality of living for Asian assignees,” said Lee Quane, Asian director of ECA International, which advises on expatriate packages and allowances.

The survey aims to help companies establish expat allowances. Companies may be seeking to slash expat packages during the global economic downturn but ECA said only a handful of cities in Asia offer expatriate staff a good standard of living.

Most of the 49 Asian locations ranked remain challenging for one reason or another, and therefore, warrant high location allowances, it said.

Top 12 Asian locations for expatriates: (last year’s rankings in brackets)

1. Singapore (1)

2. Kobe, Japan (2)

3. Yokohama, Japan (3)

4. Tokyo (5)

5. Hong Kong (4)

6. Taipei (6)

7. Macau (7)

8. Kuala Lumpur (9)

9. Bangkok (8)

10. Georgetown, Penang, Malaysia (9)

11. Shanghai (11)

12. Seoul (12)

Reuters

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US authorities are probing NIR Group hedge fund based in US/Singapore says WSJ

Reuters has reported that, according to the Wall Street Journal, the U.S. authorities are probing whether Corey Ribotsky, Managing Member of NIR Group, a New York & Singapore based hedge-fund, defrauded investors about their returns and the holdings of his various funds, citing people familiar with the matter.

The people told the paper that prosecutors from the U.S. Securities and Exchange Commission, Federal Bureau of Investigation and the U.S. attorney’s office in Brooklyn are looking at whether Ribotsky lied to investors as stock prices fell during the credit crisis. The paper said the authorities have not accused Ribotsky of wrongdoing. Ribiotsky has said he has $770 million under management.

Ribotsky’s lawyer declined to comment to the paper, saying the hedge fund manager and NIR “have no knowledge of any criminal investigation and have not been contacted by any authorities.”  Spokesmen for the SEC, FBI and U.S. attorney’s office declined to comment to the paper.

Reuters

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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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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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Deutsche Bank official reflects on the impact of the financial crisis on Asian wealth management

From The Business Times, Singapore comes news of the impact of the firestorm which hit the global financial industry, wiping out some US$3 trillion in market value, on one area, wealth management, which was particularly impacted .  Huge asset values – especially in structured products – were wiped out overnight.

Mr Raju: Says this is a US-led crisis, and Asia remains largely intact

‘All this hit suddenly after a good run for over a decade,’ noted Ravi Raju, head of Deutsche Bank Private Wealth Management Asia Pacific. ‘No one expected a huge chunk of the market to be wiped out overnight.’  Private banking clients saw their net wealth shrink substantially.

According to a recent Merrill Lynch-Cap Gemini report, the combined wealth of the world’s high net worth individuals (HNWIs) – defined as those with investible assets of US$1 million – fell 19.5 per cent to US$32.8 trillion in 2008, but should recover to US$48.5 trillion in five years. The ultra-HNWIs – those with investible assets of more than US$30 million – suffered an even sharper drop of 24.6 per cent in combined fortunes.

Meanwhile, the banks themselves – having built up huge fixed costs in investments in facilities, people and technology – were suddenly faced with shrinking margins.

According to Mr Raju, the root cause of the problem was insufficient regulation of exotic products, lack of training of the people who sold them, and poor product knowledge by the people who bought them.

‘Over the past two decades there has been such explosive growth that the industry over-expanded. There was also too much fixed investment and hiring of too many client advisers without the requisite training. Banks created and sold structured products without adequate control or oversight.’

The situation was particularly bad for the mass affluent market, or those with some US$500,000 in investible funds.

But the worst may be over, at least for Asia, said Mr Raju: ‘This is a US-led crisis, and Asia remains largely intact. In five years, when we look back, this will seem like a blip in Asia’s growth supercycle. The Asia-Pacific remains the manufacturing and entrepreneurial centre of the world.’

And Deutsche Bank’s (DB) private banking franchise is focused on this niche.

‘Entrepreneurs spend 95 per cent of their time on their business. So we offer solutions in investment banking and advisory work, then bring in our wealth management capabilities,’ Mr Ravi explained.

‘We do not compete directly with the Swiss boutique banks in Europe, which deal largely with the old money establishment. In Asia, much of the wealth is one or two-generational, and largely in the hands of entrepreneurs.’

He said the value proposition of DB’s private banking franchise was its capability to offer an array of banking services onshore: ‘DB is very much embedded in Asia Pacific. We have an onshore presence in virtually every market. So our strategy is somewhat different from the others. It enables us to forge closer partnerships with the growing numbers of entrepreneurial wealthy across Asia.’

Though smaller than the Swiss banking giants, DB’s private banking franchise is far from small.  ‘We have almost 20 billion euros (S$40.8 billion) under management in the Asia-Pacific,’ he said.

This is about 11.6 per cent of DB’s global portfolio of 165.1 billion euro, and has grown from Dec 31, 2008’s 18.4 billion euros.  With demand for wealth management still growing in the region, Mr Raju sees Singapore and Hong Kong remaining the two biggest Asia-Pacific booking centres for private wealth.

‘Singapore in particular has all the right ingredients – regulatory structure, talent, institutional framework – to emerge as a global leader in wealth management.’

But retaining this lead will require more emphasis on the quality of its wealth managers, he added.

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Pacific Alternative Asset Management Company Names Two New Partners

PAAMCO a US$9 billion fund of hedge funds company, has announced that Dr. Philippe Jorion and Kemmy Koh, based in Singapore, have been promoted to partners. The promotions, respectively, highlight the firm’s expertise in risk management and Asian alternative investment strategies.

“Philippe and Kemmy’s promotions recognize the unique contributions each of them have made to the firm,” said Jane Buchan, Chief Executive Officer of PAAMCO. “Philippe has further enhanced PAAMCO’s strong risk management processes, particularly in evaluating complex securities and new markets. Kemmy has continually shown an ability to master new investment strategies and we are delighted with her latest success in building our Singapore office and overseeing our Asian long/short strategies.”

Dr. Philippe Jorion joined the firm three years ago as a Director in the Risk Management Group based in PAAMCO’s Irvine office. He is also Chancellor’s Professor of Finance at the Paul Merage School of Business at the University of California at Irvine. Dr. Jorion holds an MBA and a PhD from the University of Chicago, and a degree in engineering from the Universite Libre de Bruxelles. Philippe has authored more than 90 publications on the topics of risk management and international finance.

Ms. Koh is Director of PAAMCO’s Singapore office. She joined PAAMCO as a summer associate in 2000 and served in a variety of research and administrative management roles on PAAMCO’s investment team before being named, in 2005, an Internal Sector Specialist in Event Driven strategies. In the summer of 2006 she moved to Singapore to take her current position. Ms. Koh holds a MBA degree from the University of California at Irvine and a BS degree from the National University of Singapore. She is a CFA charter holder.

Pacific Alternative Asset Management Company (“PAAMCO”) is a hedge fund of funds dedicated to offering strategic investment solutions to large, sophisticated institutional investors. Based in Irvine, California, PAAMCO was started in March 2000, and currently has approximately $9 billion under direct management. The firm’s portfolio management team has both a strong academic background and years of experience in working with institutions and analyzing and creating multi-strategy portfolios of hedge funds.

PAAMCO has a global staff of 120 including some 30 investment professionals and is owned by 10 of its employees. In 2003, PAAMCO established a subsidiary in London (“PAAMCO Europe”), and in 2006, established a subsidiary in Singapore (“PAAMCO Asia”), both of which are majority owned by PAAMCO in the US.

Patrick Kemmis
Senior Partner
VBK Partners LLP

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London Mayor: Hedge Fund might leave London for Singapore

We are Migrating the blog here: http://singaporehedgefund.com – faster, better,bigger…….

I know, it sounds like a tabloid headline but basicaly not too far from the truth 🙂

Mayor warns EU not to strangle world’s premier financial centre

The Mayor of London, Boris Johnson, today called on the Government to help him resist the EU Commission’s dangerous plans to regulate financial services. He fears that the plans could threaten London’s status as the global capital of financial services, and will result in European investors losing out and seriously damage the capital’s financial services industry. The Mayor fired off his warning directly to Lord Mandelson as he addressed a major economic conference in London, attended by both the Business Secretary and Shadow Chancellor, George Osborne.

Boris Johnson told delegates that he is so concerned he has sought an urgent meeting to personally lobby EU Commissioners and make the case for London. He singled out the EU draft directive on Alternative Investment Fund Management as a measure that would seriously weaken the European marketplace for hedge funds, private equity and venture capital. It will substantially reduce the choices available for investors, put up protectionist barriers around Europe, and give a huge competitive boost to financial centres outside the EU, such as New York, Singapore, Hong Kong, and Geneva – to Europe and London’s ultimate disadvantage.

In London alone, the private equity and venture capital industry directly employs around 7,000 people and it is estimated a further 35,000 people are employed directly and indirectly by hedge fund managers.  The industries are overwhelmingly based in the capital, with 80 per cent of European hedge funds and 60 per cent of European private equity funds located here. Sources close to the hedge fund industry estimate that their tax contribution alone is around £3 billion per annum. More importantly, many commentators, including EU Commission’s influential report by Jacque de Larosiere, have agreed that the hedge fund industry combined with other alternative funds do not pose a material systemic risk to the financial system as a whole.

The Mayor said: “I support strong and sensible regulation of financial services to prevent a recurrence of the financial crisis that everyone in Europe is now suffering. However, in my book this means regulating at the right level. As financial services are a global business, this must be set at a global level by the G20.

“My greatest worry is that this is just the start of a flood of draft directives that will start to filter out of Brussels. London is the home of hedge funds and private equity, but having a strong hedge fund and private equity industry is not just good for London, it is good for Europe. No other European city’s financial services sector is competing on the same international level as London, and the EU Commission must recognise this. That is why I’ve decided to personally take the lead on this and lobby key figures. London’s main competitors are outside the EU, including New York and Hong Kong, so it’s blatantly obvious that this unilateralist approach will damage our competitiveness.”

The Mayor is keen to ensure that any European regulation of the financial services industry appreciates that London is competing with international cities such as New York, Geneva, Hong Kong and Singapore. As a result the Mayor is calling for more effective international regulation that works across all of the capital’s competitors and for draft EU legislation to assist, not cut across, those efforts. He is encouraging the government to engage much more swiftly before these directives are issued so that the regulation is right for Europe, the UK and London.

The Mayor’s comments were part of a speech on his proposals for London’s economic development, set out in Rising to the Challenge, published in May. The conference, organised by the London Development Agency, is bringing together over 300 leading politicians, business people, commentators and policy makers to discuss and debate the key issues facing London’s economy and to help develop solutions to shape the future of our capital.

In his speech, he called for London to promote more powerfully its position as the world’s undisputed capital of business and ensure that central government work with the city to help keep the capital highly competitive in future. He committed to maintain London as a world-leading low carbon capital, undertake initiatives to improve Londoners’ skills and employability and to continue to invest in projects for London’s long-term economic growth.

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Who said a Risk Conference could not be sexy?

A bit of publicity never did hurt anyone so here it is: my good friends at the Risk Management Institute of the University of Singapore are holding their third annual risk management conference in Singapore on the 16-18 July 2009. I am, in fact, pleased to be invited and looking forward to it:

Third Annual Risk Management Conference

Systemic Risk and the Challenges for Risk Management

Risk Management Institute

National University of Singapore

The Ritz Carlton, Millenia Singapore

16 – 18 July, 2009

Here is the brochure

Jean Viry-Babel
senior partner
VBK partners

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improving singapore civil service?

Here is an interesting post I came across on wordpress. I enjoy reading Subba’s Blog probably more than the singapore civil servant or official press 😉

Here is an extract from his post:

“Now Singapore’s civil servants are intelligent people, but they have become ensconced in their ivory towers. There is too much group think and there is rarely a marketplace where ideas compete. Most Ministers and civil servants come from the same elitist institutions and often have a tendency to very much function like a club. I do not know how much debate happens during the cabinet meetings, but after observing Parliament proceedings closely I have rarely seen a good debate or alternate viewpoints being pursued.

More importantly, having seen civil servants and executives in Ministries and statutory boards interact, the “group think” syndrome just continues to strengthen because they don’t want to be left out of the club. Worse, any alternate view is interpreted as a challenge to the authority, not just to a point of view. Has kowtowing the superior become the SOP (standard operating procedure) or is it a “survive and grow” strategy or worse the natural default behavior? With so many Minsters and civil servants coming from the military side, I would not be surprised if compliance fetches a better premium than creativity.”

enjoy the rest here

Jean Viry-Babel
senior partner
VBK partners

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