China and hedge Funds

China and hedge Funds
As the Chinese government continues to broaden its financial markets to foreign investors, hedge fund interest in the region has climbed.

Sandra Manzke, a hedge fund industry veteran in an interview with CNN stated, “We really are becoming a more global economy. You will start seeing a lot more interest in China as they move into allowing more foreign ownership.” Sandra Manzke last year founded Maxam Capital, which runs investment products that are based on indexes of hedge funds.

In the last ten years, $400 billion to $500 billion in foreign direct investment has flowed into the country, more than the rest of Asia combined. The inflow of foreign investment brings with it new business practices that inject vitality into the old economic system. Since 1993, labor productivity has increased four fold.

China’s December 2001 accession into the World Trade Organization (WTO) is expediting economic reforms, and expected to contribute 1 to 2 percent of gross domestic product (GDP) each year. This new economic growth has inevitably whipped up investor interest as well, with hedge funds leading the charge.

China-based hedge funds gained 16.8 percent through March of this year, according to publishing and research firm Hedge Fund Intelligence (HFI).

Estimates for the U.S. hedge fund market range from $1.2 to $1.5 trillion, but assets in Asia-Pacific hedge funds now account for $115 billion, according to HFI. Assets in Hong Kong-based hedge funds have jumped from $1.8 billion in 2000 to $15.9 billion in 2005.

US Global Investors China Region Opportunity Fund is one company taking advantage of this climbing market. The fund’s objective is to achieve capital appreciation by capitalizing on the economic growth in the Greater China Region, including China, Hong Kong, Singapore and Taiwan. Also new to the scene is the Alger China-U.S. Growth Fund – This new fund invests not only in greater China, but in Hong Kong, U.S. and other Asian or multinational companies that stand to benefit from China’s economic expansion.