Three Global Top Hedge Funds Expand into Hong Kong
Hudson Bay, a connecticut-based firm running around US$20 billion, registered in Hong Kong in early October. Recent hiring efforts indicate that the firm is accelerating its preparations to establish its first office in Asia and its seventh worldwide.
Sona Asset Management overseeing US$10.1 billion and concentrating on European public and private credit markets. The company set up a subsidiary in Hong Kong last August and is currently actively seeking to relocate staff and hire new employees to staff the new entity.
After expanding to Singapore three years ago, Centiva Capital secured a regulatory license for its Hong Kong operations in late November. Key personnel relocating to Hong Kong include Asia head Matthew Haudenschield and equity capital markets specialist Piers Cassidy, who moved to Hong Kong following the easing of Covid-19 restrictions in Singapore.
Why Hong Kong?
Hong Kong, traditionally the largest hedge fund center in Asia outside of Mainland China, attracts these funds for a variety of reasons:
Tax Incentives and Regulatory Environment
Hong Kong is renowned for its low tax rates and simple, transparent tax system. Funds re-domiciled to Hong Kong (including private equity (PE) funds) fulfilling the relevant conditions under the unified tax exemption regime for funds can enjoy profits tax exemption.
In recent years, Hong Kong has implemented a series of policy innovations to strengthen its position as a global fund hub. Notably, the introduction of the Open-ended Fund Company (OFC) in 2018 and the Limited Partnership Fund (LPF) in 2020 has transformed the landscape for fund managers. These frameworks offer enhanced flexibility in fund structuring and management, streamline operational costs, and have significantly boosted Hong Kong’s appeal as a destination for international capital to establish and register funds.
Re-domiciliation Arrangements and Market Access
Hong Kong Government has introduced fund re-domiciliation arrangements, enabling overseas funds to seamlessly transfer their registration to Hong Kong. This policy provides a streamlined solution for global hedge funds, particularly amid ongoing geopolitical uncertainties. As a relatively neutral and stable financial hub, Hong Kong is an ideal location for many funds to establish or expand their presence.
Gateway to the Mainland China
Hong Kong serves as a vital gateway connecting Mainland China with global markets. Its strategic location and policy advantages make it the ideal springboard for hedge funds seeking access to the Mainland China market. With the gradual opening of Mainland capital markets, Hong Kong’s role in cross-border investment has become increasingly significant.
