HSBC May Launch Retail Hedge Funds In SAR

by Mary Swire, Investors Offshore, Hong Kong

22 March 2002

HSBC tripled its sales of unit trusts in Hongkong and Shanghai last year and it will launch a host of new products in 2002, possibly including hedge funds for retail investors, said Dorothy Sit, the bank's regional head of saving and investments. Sales of the unit trusts soared as investors sought better returns from equity markets after a series of interest rate cuts left deposit rates near zero.Guaranteed funds or similar products could be made attractive in either low or high interest rate environments, said Ms Sit.

HSBC is one of a number of firms planning to launch retail hedge funds in Hong Kong on the assumption that the Securities and Futures Commission will permit a loosening of current restrictions on retail marketing of the products in 2002. Last week, Financial Secretary Antony Leung said the city needs hedge funds in order to become Asia's pre-eminent financial center. "We would like the hedge funds to be located in Hong Kong," Leung said. "We are doing things both on the legislation and the regulatory side. More importantly our market provides more liquidity for hedge funds to operate."

The SFC, however, has been making heavy weather of a decision to relax local hedge fund marketing restrictions, having already missed two deadlines for issuing new rules, and the Monetary Authority of Singapore beat Hong Kong last year in opening up hedge funds to the public by setting out guidelines on their promotion.

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