WEST PALM BEACH, FL (www.hedgeco.net) – Hong Kong has urged Asian governments to review their oversight policies on hedge fund activities. The Hong Kong Financial Secretary, Henry Tang said such strategy is needed because hedge funds have continuously become more popular with retail investors.

According to Reuters, Mr. Tang made his remarks at the Asia-Pacific Economic Cooperation (APEC) meeting in South Korea. He said,  “While we recognize the contribution to market liquidity and risk diversification by hedge funds, concerns remain that hedge funds, as a group with significant and concentrated exposures, have accelerated market volatility especially in markets of thin liquidity.”

The Asian financial and currency crisis of the late 1990s led Asian leaders to call for an investigation of hedge funds. Some Asian government leaders charged that hedge fund’s speculative actions helped to generate the currency financial crisis which most of the so called Asian Tiger economies experienced.

 The call led to an IMF investigation that cleared hedge funds from such charges. Then Asian countries began introducing hedge funds in their jurisdictions, most notably Singapore, Hong Kong and Malaysia. In 2002, Hong Securities Regulator revised its hedge fund investment rules, and imposed minimum standards for hedge fund managers aspiring to sell their products to the general public.

Tang said, “With the increasing popularity of hedge funds to retail investors, we should consider the regulation of hedge funds from the angle of investor protection.”  Adding, “It is timewe revive the discussion on whether some form of oversight is necessary.” Assets of Asian hedge funds have risen to about $65 billion, representing nearly 6.5 percent of the global hedge fundmanagement assets.

Paul Oranika
Contributing Writer
HedgeCo.Net
Email: Editor@hedgeco.net

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