Date
21 October 2017
Trading in stock index futures on the China Financial Futures Exchange fell 99 percent in six months after last year's stock market crash and the introduction of tough new rules. Photo: Shanghai Daily
Trading in stock index futures on the China Financial Futures Exchange fell 99 percent in six months after last year's stock market crash and the introduction of tough new rules. Photo: Shanghai Daily

Chinese hedge funds head for Hong Kong

Beijing’s crackdown on investment activities after last year’s stock market plunge is driving growing numbers of Chinese hedge fund managers to set up new funds in Hong Kong.

These investors, many of whom trained at western financial institutions before returning to China as its financial markets grew, say they are looking for better trading conditions, The Wall Street Journal reports.

“The regulation is constantly changing, and we are looking for markets with more stable trading regulations,” Qin Zhiyu, chief executive of Beijing-based Hantak Investment Advisors, was quoted as saying.

Like several other firms planning new funds in Hong Kong, Hantak uses mathematical models to identify market patterns.

Stiff regulations introduced last September effectively halted trading in stock index futures, a key part of the strategy of these funds.

The result was a 99 percent drop in the number of stock index futures contracts changing hands on the Shanghai-based China Financial Futures Exchange — once the world’s biggest market for these derivatives — to fewer than one million in January from 61 million in June last year, World Federation of Exchanges data shows.

China’s authorities were swift to blame last year’s stock market crash on hedge funds, which weren’t legally recognized in the country until 2013.

However, Chinese hedge fund managers say they aren’t closing up shop at home yet, the report says.

Setting up new funds outside the mainland, though, will vastly expand the number of available markets and trading tools, such as the popular Singapore-traded FTSE China A50 futures contract.

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