There is a trend of prime brokerages and hedge fund administrators opening up shop in Singapore. They are responding to a growth in Singaporean hedge fund operations that has proliferated in recent years. Citigroup has recently established a presence there, opening an office last month. Credit Suisse and UBS expanded their presence to Singapore last year, while Barclays Capital centres its regional prime broking in the Lion City.
Some of this growth is at the expense of Hong Kong; hedge fund managers gravitating to Singapore being mindful of more conciliatory regulation from the Monetary Authority of Singapore. Singaporean hedge fund managers accompanied by families also cite the ælifestyleÆ factor, namely that unlike Hong Kong, an apricot-coloured layer of smog does not sit atop the city on a semi-permanent basis.
Some Singaporean hedge funds have voiced scepticism about service providers arriving on their shores, all professing a desire to get close and cuddly. Since Singaporean hedge funds are often smaller in size than those in Hong Kong, they are worried that the service providers will not be interested in them if they are more diminutive.
Kurt Baker, head of Asian prime brokerage for Morgan Stanley in Hong Kong, says: ôOur focus is on both small and large funds. For all managers the complexity of trades has increased, and being closer to them means we can offer in-the-room assistance. Of course, it is often the smaller funds with less internal operational support, especially in the early days, which will lean on the prime broker more. ThatÆs what we are here for, to help all clients stay focused on the investment process and on growing their assets.ö
Morgan Stanley was the winner of AsianInvestorÆs hedge fund services poll in the category of prime brokerages which was undertaken in December 2006. Morgan Stanley won in all four categories and carried over 50% of the vote.