China is the world's fastest growing major economy, and perhaps the most
dynamic. Since 1978, when the country announced its opening up and
reform policy, and began experimenting with capitalism and market
forces, the country's economy has boomed. While growth has begun to slow
sharply in 2008, after growing at close to 12 percent in 2007, China is
a rising global economic power. Growth has been driven by exports and
heavy investment in infrastructure and manufacturing. Coastal regions
are powered by manufacturing, but state-owned companies continue to
dominate the domestic economy, even though private entrepreneurs are
beginning to thrive.In recent years, China has racked up a huge trade surplus with the rest
of the world, particularly the United States and Europe, and has also
accumulated over $1 trillion in foreign currency reserves. The country's
stock market is troubled and volatile, though an increasingly powerful
force. Widespread bribery and corruption are formidable challenges for
companies doing business here. Intellectual property theft and
counterfeiting are also persistent problems. Still, China has some of
the world's most dynamic Internet companies, such as Baidu.com, Tencent
and Alibaba.com, and a growing number of wealthy entrepreneurs and
billionaires. Many of the world's biggest and most prestigious brands,
such as Coca-Cola, Microsoft and Procter & Gamble are aggressively
expanding their operations in China.
Wednesday, 31 October 2012
Monday, 29 October 2012
China opens door to foreign hedge funds
China has given foreign hedge funds permission to tap its wealthy
citizens inside the country for funds to invest overseas, according to
people in the industry.The move represents another important step by China to open its capital
account – a process that involves dismantling regulations separating
China from international markets.
Laurie Pinto, chief executive of North Square Blue Oak, a London-based investment bank that focuses on China, said that hedge funds were already queueing up to apply for licenses, even though the programme had not been formally announced.
“There’s an amazing distribution potential in China and an amazing need for this product,” he said. “Everyone wants to be in this, but it’s complicated and it’s China.”
The reform, called the Qualified Domestic Limited Partner programme, invites hedge funds to apply for licenses to register in Shanghai, two people said. One person said that only the world’s biggest hedge funds, with at least $10bn assets under management, would be allowed to participate at first
Rather than dividing that amount evenly into individual quotas for the hedge funds, they will be invited to fight for as big a slice of the overall amount as possible, according to one person. The objective is to give rise to more market competition than exists in China’s cross-border equity investment programmes, where quotas for each institution are centrally managed by the regulators,
As is always the case with economic reforms in China, the hedge fund programme will start slowly and cautiously. A low ceiling, likely to be about $5bn, will be placed on the amount that can be raised collectively by the institutions that are granted licenses.
Chinese investors face an extremely limited array of options. The domestic stock market is seen as a casino, the corporate bond market is under-developed and there are few openings for investing abroad.
As a result, property has been the investment of choice for wealthy Chinese over the past decade, fuelling a real estate bubble that the government is attempting to deflate.
There has been concern in recent months about a rise in capital outflows from China, so the fact that the government appears willing to launch the hedge fund initiative is likely to be seen as a signal of its confidence that the risk is under control. The State Administration of Foreign Exchange, which approves big cross-border transactions, will still have the final say over any money leaving the country.
Giving institutional investors more access to foreign investment opportunities is an essential part of the government’s efforts to develop healthier capital markets.
In recent months the Chinese government has also granted foreign institutions bigger quotas for investing in the country’s capital markets and it has expanded the renminbi’s trading band, making it a more flexible currency. Although each of these reforms has been small in impact, analysts say that taken together they constitute a concerted push to experiment with more relaxed capital controls.
.
Laurie Pinto, chief executive of North Square Blue Oak, a London-based investment bank that focuses on China, said that hedge funds were already queueing up to apply for licenses, even though the programme had not been formally announced.
“There’s an amazing distribution potential in China and an amazing need for this product,” he said. “Everyone wants to be in this, but it’s complicated and it’s China.”
The reform, called the Qualified Domestic Limited Partner programme, invites hedge funds to apply for licenses to register in Shanghai, two people said. One person said that only the world’s biggest hedge funds, with at least $10bn assets under management, would be allowed to participate at first
Rather than dividing that amount evenly into individual quotas for the hedge funds, they will be invited to fight for as big a slice of the overall amount as possible, according to one person. The objective is to give rise to more market competition than exists in China’s cross-border equity investment programmes, where quotas for each institution are centrally managed by the regulators,
As is always the case with economic reforms in China, the hedge fund programme will start slowly and cautiously. A low ceiling, likely to be about $5bn, will be placed on the amount that can be raised collectively by the institutions that are granted licenses.
Chinese investors face an extremely limited array of options. The domestic stock market is seen as a casino, the corporate bond market is under-developed and there are few openings for investing abroad.
As a result, property has been the investment of choice for wealthy Chinese over the past decade, fuelling a real estate bubble that the government is attempting to deflate.
There has been concern in recent months about a rise in capital outflows from China, so the fact that the government appears willing to launch the hedge fund initiative is likely to be seen as a signal of its confidence that the risk is under control. The State Administration of Foreign Exchange, which approves big cross-border transactions, will still have the final say over any money leaving the country.
Giving institutional investors more access to foreign investment opportunities is an essential part of the government’s efforts to develop healthier capital markets.
In recent months the Chinese government has also granted foreign institutions bigger quotas for investing in the country’s capital markets and it has expanded the renminbi’s trading band, making it a more flexible currency. Although each of these reforms has been small in impact, analysts say that taken together they constitute a concerted push to experiment with more relaxed capital controls.
.
Friday, 26 October 2012
Investing in Gold Stocks
There are a few things investors should know about before they take the plunge, however. We’ve outlined some things that make gold investing different from other investments.Gold has certainly made a mark in the investment world. More people are now considering investing in gold stocks, a small part of the total stock market.
Here are some basics about gold stocks that every investor should know before they begin:
1. Valuation – Gold stocks, and all commodity stocks, can run from being very highly valued and very low valued. If gold prices continue on an upward directory, PE ratios are likely to rise as well. If gold prices fall, then PE ratios are also likely to drop. The valuation of a particular company can change quickly when PE ratios move from 10 to 15, for example. PE ratios are more likely to expand or contract when investors are become more or less excited about a particular industry.
2. Gold stocks are volatile – Gold mining stocks that list on the stock market are volatile because of the ever-changing value for gold. When gold moves up 5%, a gold stock may easily advance 10% or more. Likewise, a 5% drop in gold prices may lead to a 10% shave off the price of gold mining stocks.
3. Dilution – Gold mining companies often dilute their shares to fund new operations and mining investments. This means that the share count is increased, and the relative value of one share of the company decreases over time. When a stock is diluted, the ownership of a single share is worth less, as there are more shares of a single company.
4. Risky investments – Investing in gold stocks is not for the faint of heart. Investing in gold mining stocks is sure to send your heart beating with each change in the gold price. Also, new and promising mines don’t always pan out as well as previously expected, or there may be disruptions that keep new mines out of production for weeks or months at a time.
5. Growth is minimal – Most companies that produce commodities experience very little growth. In general, new mines have to be found to produce enough to cover old production. The only way to grow is to continue adding new production and future production to the supply line. To grow earnings is generally a lot easier, as it is simply dependent on price of the product when it is sold to the next company in the production chain. Rising gold prices give a very obvious lift to the profits at mining companies.
Here are some basics about gold stocks that every investor should know before they begin:
1. Valuation – Gold stocks, and all commodity stocks, can run from being very highly valued and very low valued. If gold prices continue on an upward directory, PE ratios are likely to rise as well. If gold prices fall, then PE ratios are also likely to drop. The valuation of a particular company can change quickly when PE ratios move from 10 to 15, for example. PE ratios are more likely to expand or contract when investors are become more or less excited about a particular industry.
2. Gold stocks are volatile – Gold mining stocks that list on the stock market are volatile because of the ever-changing value for gold. When gold moves up 5%, a gold stock may easily advance 10% or more. Likewise, a 5% drop in gold prices may lead to a 10% shave off the price of gold mining stocks.
3. Dilution – Gold mining companies often dilute their shares to fund new operations and mining investments. This means that the share count is increased, and the relative value of one share of the company decreases over time. When a stock is diluted, the ownership of a single share is worth less, as there are more shares of a single company.
4. Risky investments – Investing in gold stocks is not for the faint of heart. Investing in gold mining stocks is sure to send your heart beating with each change in the gold price. Also, new and promising mines don’t always pan out as well as previously expected, or there may be disruptions that keep new mines out of production for weeks or months at a time.
5. Growth is minimal – Most companies that produce commodities experience very little growth. In general, new mines have to be found to produce enough to cover old production. The only way to grow is to continue adding new production and future production to the supply line. To grow earnings is generally a lot easier, as it is simply dependent on price of the product when it is sold to the next company in the production chain. Rising gold prices give a very obvious lift to the profits at mining companies.
Wednesday, 24 October 2012
Hedge Fund Industry Assets
Hedge Funds Now Control $2.2 Trillion in Assets
Hedge funds now manage more than $2 trillion in assets for its investors after the industry tacked on $80 billion inflows from July to September. The current estimate from Hedge Fund Research rests at $2.2 billion, a stunning figure that more than doubles the estimated industry AUM in 2005.Global hedge funds now oversee $2.2 trillion in assets, up from $2 trillion at the end of the 2011 and more than double what they invested for their wealthy clients in 2005, new data released by Hedge Fund Research on Thursday show.
Strong returns during the third quarter have boosted the hedge-fund industry to its largest size ever, offsetting a more muted appetite among investors for these types of funds, research data shows.
Assets grew by $80 billion during July, August and September with some $70 billion coming from better performance and only $10.6 billion coming from net new investments from clients.
So far, pension funds, endowments and wealthy individuals invested only $31 billion net new capital into hedge funds this year, compared with $70.6 billion in 2011, when funds mostly lost money, and $194.5 billion in 2007 just before the financial crisis.
Monday, 22 October 2012
How to Start a New Hedge Fund
Starting a hedge fund is much different from launching other kinds of companies. Most significantly, there is almost no chance that you will be able to start this business out of a garage. To get a hedge fund up and running, you need buckets and buckets of cash.
If you are wondering why someone would provide money to an unproven fund, Ackles said that it's because of the advantages in being the first to jump on board. "You negotiate a deal where they get reduced fees," he said. "So they pay less than the investors that come after them, so they get a sweeter deal."
Launch Time
"Then after that, I've got my $100 million and I launch," said Ackles. "What it takes next is me creating the actual business, just like you and I would do for any [other business]. So I need to have the infrastructure; I need to pick a place for an office, I need to hire a team."
That team could come from a bank if your hedge fund spun off of one. "It might be a portfolio manager at the top, but there are traders that work with him," said Ackles. "And perhaps others -- a compliance person, a legal person. You have to hire people.
Raising Capital
"Let's say you've got all of those pieces," Ackles continued. "Now you need someone to help you raise the money. While an investor wants access to the portfolio manager, the portfolio manager has the day job of watching the trades. Typically they will hire marketing people, so there's going to be someone in-house or external that is charged with bringing investors to the table."
Managers still have to come to the meeting, Ackles said, "because you won't give anyone a check for millions of dollars without seeing their face and looking them in the eye."
"But there's someone that has to do all of the legwork and get the meeting and make sure that those things happen, and even help report the fund's performance to databases so that those investors might call them."
Build Your Brand
A hedge fund could have all the pieces in place. But if investors don't know it exists, it won't go anywhere.
"If you don't have a website and you don't speak at events, how are you going to be known?" Ackles questioned. "I may be two blocks from you and have money to allocate to the type of strategy you have, but if I don't know you're there, and we don't meet each other, I'm never gonna write you the check. So you have to have some amount of publicity.
"
If you are wondering why someone would provide money to an unproven fund, Ackles said that it's because of the advantages in being the first to jump on board. "You negotiate a deal where they get reduced fees," he said. "So they pay less than the investors that come after them, so they get a sweeter deal."
Launch Time
"Then after that, I've got my $100 million and I launch," said Ackles. "What it takes next is me creating the actual business, just like you and I would do for any [other business]. So I need to have the infrastructure; I need to pick a place for an office, I need to hire a team."
That team could come from a bank if your hedge fund spun off of one. "It might be a portfolio manager at the top, but there are traders that work with him," said Ackles. "And perhaps others -- a compliance person, a legal person. You have to hire people.
Raising Capital
"Let's say you've got all of those pieces," Ackles continued. "Now you need someone to help you raise the money. While an investor wants access to the portfolio manager, the portfolio manager has the day job of watching the trades. Typically they will hire marketing people, so there's going to be someone in-house or external that is charged with bringing investors to the table."
Managers still have to come to the meeting, Ackles said, "because you won't give anyone a check for millions of dollars without seeing their face and looking them in the eye."
"But there's someone that has to do all of the legwork and get the meeting and make sure that those things happen, and even help report the fund's performance to databases so that those investors might call them."
Build Your Brand
A hedge fund could have all the pieces in place. But if investors don't know it exists, it won't go anywhere.
"If you don't have a website and you don't speak at events, how are you going to be known?" Ackles questioned. "I may be two blocks from you and have money to allocate to the type of strategy you have, but if I don't know you're there, and we don't meet each other, I'm never gonna write you the check. So you have to have some amount of publicity.
"
Saturday, 20 October 2012
Gamble exit from the euro hedge fund exchange
The crash sly, in addition to hedge funds to exit the concerns of the euro area to Greece, aroused Peng Pai influx of speculative short selling of gold, but also because hedge funds tend to slowdown of global demand for physical gold have short selling arbitrage.
"Corner gold bulls tend to not slow down." A commodity investment hedge fund trader Timothy W. Tong revealed, even if the price of COMEX gold futures fell more than 8.1%, led to the gold bull protection fund of hedge funds depleted.
Create most of the hedge fund with the euro exchange rate fell, since May is the coherence of the euro and the gold trend is a sharp growth, and thus have to dominate both the two down the process spreads to expand, reverse arbitrage.
Timothy W. Tong, for example, more popular, due to the debt crisis in Europe to upgrade to first force the euro exchange rate crash, hedge funds will have to play a moment, aiming for the euro exchange rate fell more than gold, increased short selling of gold positions, promote the trend of gold and the euro fell to reach a fair coherence interval, speculative gains earned by short selling of gold.
CFTC data show that as of May 8 when the week, gold futures net short positions of hedge fund assets based RBI institutions jumped 19,684 last week (1 to 100 troy ounces).
Hedge fund "new thinking"
Reporter to appreciate in the short selling of Euro gold influx of sly, is part of the hedge funds turn Fools euro area prepared to save the city "is further exacerbated by short selling of gold efforts.
"Even some of the hedge funds trust the euro-zone countries would be extremely ribavirin Greece to stay in the euro area, but solidarity with the preparation of the euro-zone countries unlucky in the rebound of the euro." Timothy W. Tong revealed at the present hedge funds feeling the euro-zone countries rescue Greece's important preparation is divided into two, one landed the Greig interest rate landing the euro area financial capital money, and second, the European Central Bank to perform a new round of LTRO (long-term refinancing to dominate), the supply of aid and to the Greek; but both in the preparation of an important principle growth in the euro dealings scale, unlucky in the rebound of the euro, "hedge funds dominate the euro fell short selling of gold is more control."
Often account deficit inexhaustible expand Chong documentary imports of gold led to one of the world's largest gold consumer, India had released the announced tariffs on imports of gold in India to advance to the 4%, resulting in Indian imports of gold in April dropped to about 35 tons, The older a year earlier, landing nearly 55 tons
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