E Fund Management, Chinas second largest asset management firm, is to launch the countrys first registered hedge fund, according to the China Daily and Bloomberg. The Bank of China will be the trustee for the vehicle.
The hedge fund will be aimed at high net worth individuals using separately managed accounts. China now holds around 477,000 millionaires, according to the World Wealth Report 2010, published by Merrill Lynch Global Wealth and Capgemini SA.
The China Securities Regulatory Commission introduced short selling and index futures in April, in order to ease volatility on the Shanghai Stock Exchange.
There are a number of existing hedge funds in China, however prior to the rule change, Chinese hedge funds went long on Chinese stocks, and shorted shares in firms listed in Hong Kong and Taiwan in order to create hedged strategies.
According to Bloomberg, China Southern Fund is also looking to set up a hedge fund.
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