India is now clearly in the radar of the global hedge fund industry after recent statements by the Securities and Exchange Board of India favoured the direct entry of long-term hedge funds.
Hedge Funds World, an international hedge fund lobby group and a leading organiser of hedge fund conferences globally, will hold its first Hedge Funds World India series next year.
The series, to be held in Singapore in the second half of 2007, is expected to feature over 50 global and domestic fund managers and investors.
"While hedge funds growth has reached maturity in the developed markets of Asia like Hong Kong, Singapore and Japan, India still has a lot to offer to local and international fund managers," a note sent to clients by Hedge Funds World said.
Currently, hedge funds are denied direct entry into India and most of them operate through participatory notes. According to sources, hedge funds, which manage over $14 trillion in assets the world over, expect the Indian market to be opened up for their direct entry before the Singapore meeting.
"The Asian market as a whole has become lucrative for many hedge funds in recent years. Though Hong Kong, Japan and Singapore top the list, a lot of recent activity has also been seen in the Indian market. The burgeoning money-making opportunities India offers have become rare in the US and the European Union. As a result, hedge funds have been aggressively pumping money into India," the note explained.
Sources said hedge funds were being viewed as a necessary condition for financial markets to mature. "India looks increasingly attractive with annualised returns in double figures despite the recent volatility. The number of dedicated Indian funds has also increased by leaps and bounds, while assets under management by these funds have more than doubled," a source said.
Interestingly, hedge funds see better prospects in India, when compared with all other major markets in the region.
"Indian markets are more fertile for hedge fund operations than those of China. Such advantage has been derived from the growth of the derivatives market in the country, in addition to revision and modernisation of investment laws and regulatory oversight. Derivatives trading in India is becoming better for hedge funds' trading activities, compared with China. As a result, there has never been a better time to set up or establish an India-focussed hedge fund," the note said.
India-focussed hedge funds have been beating their counterparts operating in other Asian markets in recent months by growing their assets in double digits on a monthly basis.
