Hedge funds look east as regulation bites

A number of funds of hedge funds are also planning offices in the Asian cities, Dan McNicholas, head of Asia financing sales at Merrill Lynch said. McNicholas spoke in a Bloomberg Television interview without mentioning any names.

New York: Bank of America Merrill Lynch is helping more than a dozen multibillion dollar international hedge funds set up or reestablish a presence in Hong Kong and Singapore as the US and Europe increase industry regulation.

A number of funds of hedge funds are also planning offices in the Asian cities, Dan McNicholas, head of Asia financing sales at Merrill Lynch said. McNicholas spoke in a Bloomberg Television interview without mentioning any names.

Hedge fund managers have been tempted by Hong Kong’s regulatory environment, the region’s economic growth and potential investment opportunities as US and Europe have proposed to increase taxes on the financial industry. London Mayor Boris Johnson said that as many as 9,000 bankers may leave the UK capital’s financial district as a result of a 50 per cent tax on bonuses announced last month.

“When you compare to New York or London, the business environment has been very friendly for managers,” McNicholas said. In New York and London “you are seeing tax proposed and other restrictions on business that may make Hong Kong and Singapore attractive”.

Asia is also expected to absorb a larger proportion of global hedge fund inflows than it historically received as funds need to correct their under-allocations to the region, he said. More than 15 per cent of the $50 billion (Dh183.5 billion) to $100 billion of hedge fund inflows expected in the first quarter may go to Asia, McNicholas said.

The UK last month imposed a 50 per cent tax on banks for bonuses of more than £25,000. It is also raising taxes on residents earning more than £150,000 a year to 50 per cent from 40 per cent.

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