China Gets First Official Hedge Fund

Feb 14 2011 | 9:04am ET

The asset management arm of China’s Guotai Junan Securities plans to launch a US$45 million (300 million yuan) hedge fund, the first in China.

While many Chinese asset managers call themselves hedge funds, none have been approved by the securities regulator.

Zhang Biao, president of Guotai Junan Securities Asset Management, told Reuters the fund will be market neutral, using index index futures to mitigate systematic market risks.

“There's huge demand for such products in China, with the market awash with cash seeking modest, but stable returns," Zhang said.

The fund will target wealthy individuals; minimum investment is 2 million yuan (about US$300,000).

Guotai Junan Securities Asset Management plans to launch identical funds later to raise up to 5 billion yuan (about US$760 million).

Zhang said China has no fear of hedge funds: "The door is just open. Hedge funds in China are rabbits and sheep now, not wolves and tigers.”

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