Singapore Rising Up The Hedge Fund Charts

by Phillip Morton, Investors Offshore.com

25 April 2005

Singapore is emerging as the most popular Asian location amongst hedge fund managers for fund start ups, and the city state saw more new fund registrations than either Hong Kong or Australia in 2004.

According to data compiled by Eurekahedge, Singapore saw 19 fund launches last year, compared to 13 each in Hong Kong and Australia.

However, despite Singapore's emerging status as the top choice among hedge fund managers in Asia, in terms of assets under management and average fund size, Hong Kong remains considerably larger.

At the end of 2004 there was US$9.3 billion in assets under management in Hong Kong compared to US$2.8 billion in Singapore. Average fund size in Hong Kong was US$114 million compared to Singapore's US$46 million.

The factor that appears to be spurring hedge fund growth in Singapore is the relatively short time taken to register a fund in the city-state, an issue identified by hedge fund managers as the most crucial.

While fund registration in Singapore may take around two weeks, in Hong Kong it can take several months. As a result, Singapore has managed to attract interest from some major America funds including the likes of Tudor, Everest and Moon Capital.

Also, under changes designed to help foster growth in the financial services sector, Singapore's Prime Minister Lee Hsien Loong announced in February's budget that start-up fund managers will be given a 12-month grace period to meet the requirement that 80% of share capital must come from foreign investors to qualify for a 10% tax rate on fee income. This has also helped to win over the global hedge fund community.

"The doubling of Singapore's share of the region's start-ups from 12 per cent in 2003 to 20 per cent in 2004 has much to do with active measures that the Monetary Authority of Singapore has put in place to woo prime brokers and other builders of market infrastructure," noted Eurekahedge in its report.

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