China Considering Opening Up to Hedge Funds

In an announcement that could send shock waves around China and beyond, the China Securities Regulatory Commission (CSRC) has recently said that it is considering allowing hedge funds to have direct access to the Chinese market.  Up until now, they have not allowed hedge funds access, and the move could certainly have an impact on companies like NYGG with Benjamin Wey.

The CSRC is currently drafting proposals that could lead the way for investors to get a license to trade stocks. This would give them a Qualified Foreign Institutional Investor (QFII). At the moment, to qualify as a QFII is quite difficult, requiring US $5 billion in assets under management – in addition to requiring the company to have been in business for a minimum of five years.  The regulator is now considering reducing the minimum requirement for assets under management.

As one Singapore-based hedge fund employee said, "Allowing hedge funds to operate in China would fit in with the regulator's push to clean up the financial industry, make it more professional and allow greater freedom for the flow of cash in and out of China. China is the world's second biggest economy and lots of companies want to list there so any hedge fund would love direct access to this market. It could spawn a new hedge fund community given China's exciting potential."