HSBC Holdings Plc (HSBA), the largest European bank by assets, plans to double its Asia-Pacific prime finance team’s cut of hedge-fund assets in the coming year, said Melvyn Ford, regional head of the business.
It is part of a target to improve its standing by two places to the region’s sixth-largest primebroker over the 12 months, Ford said in an interview in Hong Kong yesterday. HSBC was ranked eighth in its first full year in a survey by a regional trade journal.
HSBC was a late entrant to the Asia-Pacific prime brokerage market dominated by the likes of Goldman Sachs Group Inc., Morgan Stanley and Credit Suisse Group AG. Banks are competing for regional hedge-fund assets that slipped 1 per cent to USD139 billion in 2012 after the closures of those unable to cope with falling revenue and rising costs that cut the number of funds by 5 per cent.
“For everyone, it has been a challenging year,” said Ford. “We definitely announced our arrival. We’re trying to pick the clients and partner with clients that really want to be trading counterparts of HSBC.”
HSBC has been the biggest hedge-fund administrator in the region; it secured 33 sole and shared prime-brokerage mandates from regional hedge funds, 24 of them from those based in Hong Kong and China, according to the survey. More than 80 per cent of HSBC’s Asian prime-brokerage clients are established managers, which have been operating for some time, Matthew Kiraly, head of sales and marketing on the Asia-Pacific prime finance team, said during the interview. About seven of the 10 largest China-focused managers are clients of HSBC’s prime-brokerage unit, he added.
“I don’t envisage us taking a huge number of new prime clients based in the region, maybe between five and 10 a year,” said Ford.
Instead, the team will focus on allocating the necessary resources to each client to encourage them to do more business with HSBC, including borrowing more from the bank and placing a bigger share of assets with it, Kiraly said.
The bank will increase its focus on the US and Singapore in the next few months after targeting initial efforts at funds based in Greater China, said Kiraly.
As much as 70 per cent of Asian prime-brokerage revenue is still generated from U.S.-based clients, said Ford.
JPMorgan Chase & Co. has hired a senior prime services banker for a new Asia-Pacific role from Credit Suisse AG, as investment banks continue to build out their hedge funds businesses in the region.
David Leahy joined the U.S. bank as managing director and head of Asia-Pacific prime services sales, according to an internal memo as reported by The Wall Street Journal. He will be based in Hong Kong.
A JPMorgan Chase spokesman in Hong Kong confirmed the move.
Mr Leahy was previously head of hedge fund and institutional coverage for prime services in Europe, Middle East and Africa at Credit Suisse, based in London. He worked in Asia earlier as Credit Suisse First Boston’s head of hedge fund coverage for Asia.
Japan's Nikkei share average dived 5.2 per cent on Thursday, leading a tumble in Asian stocks as concerns about the U.S. Federal Reserve scaling back its huge stimulus programme in the next few months rattled investors.
The plunge in the Nikkei accelerated in the afternoon, extending the benchmark's losses to nearly 15 per cent since it hit a 5-1/2-year high on May 23, putting it well into "overbought" territory and leaving it ripe for profit-taking. It ended 7.3 per cent lower the same day.
Fed Chairman Ben Bernanke said last week that the U.S. central bank could decide whether to reduce its USD85 billion in asset purchases every month at one of its "next few meetings," depending on economic data.
His comments pushed up Treasury yields to 13-month highs on Wednesday, prompting investors to cut back on high-dividend paying stocks in the United States and Asia. Singapore's real estate investment trust (REIT) index sagged a further 2.8 per cent on Thursday after shedding 2.8 per cent in the previous session.
"People are worried that a winding down of quantitative easing could end the generous supply of money, leading to a surge in interest rates and a downturn in stock prices and economies," Ryoji Musha, president of Musha Research in Japan, wrote in a report.
The spread between the dividend yield for Japan's Topix index and the yield on the benchmark 10-year Japanese government bond touched 0.654 per cent, its lowest since March 2011, on May 22, the day before last week's selloff, according to Thomson Reuters Datastream.
It stood at 0.735 per cent on Wednesday, the latest figure available.
Asian shares measured by the MSCI Asia-Pacific outside of Japan slipped 0.5 per cent on Thursday, with the Singapore benchmark down 1.1 per cent, Taiwan shares off 1.1 per cent and Philippine shares shedding 3.8 per cent.
High-yielding counters also fell in Hong Kong and Australia.
The Nikkei ended at its lowest since April 22, with index heavyweight Fast Retailing (9983.T ), the owner of casual fashion chain Uniqlo, sinking 11 per cent.
Despite the recent selloff, the Nikkei is still up 10 per cent since April 4, when the Bank of Japan announced a sweeping monetary expansion campaign to eliminate years of deflation and revive growth, and has risen 31 per cent this year.
Hong Kong's regulator is set to proceed with its insider-trading case against Tiger Asia Management now that the city's highest court has formally entered its ruling against the defunct hedge fund.
The Court of Final Appeal on Friday issued its written opinion, nearly a month after the court first ruled in the Securities and Futures Commission's favor. The regulator can now bring its fraud case against Tiger in Hong Kong's Court of First Instance.
Tiger Asia closed in August and in December pleaded guilty to US insider-trading charges that mirror those brought by the SFC in Hong Kong. Both cases accused Tiger Asia's Bill Hwang of ordering trades based on confidential information about two Chinese banks.
The SFC first brought its case against Tiger Asia in 2009, but the hedge fund argued that the regulator could not sue it or seek to have its principals barred without a tribunal or criminal court filing. But Tiger Asia, which was based in New York, had no physical presence in Hong Kong, making a criminal case difficult to bring.
Chief Justice Geoffrey Ma ruled that the SFC was permitted to go after Tiger Asia anyway. "In these proceedings, the SFC acts not as a prosecutor in the general public interest but as protector of the collective interest of persons dealing in the market who have been injured by market misconduct. These are civil proceedings and do not attract the protection accorded to criminal defendants."
Barclays PLC' s head of debt syndicate in Asia Kenneth Lee resigned last week, according to a person familiar with the situation Tuesday.
Mr Lee will start his own hedge fund after his gardening leave ends in August, the person said. Mr Lee has been with the U.K. lender for more than 10 years and has been a managing director since 2007.
Meanwhile, Ken Wei Wong, director of debt syndicate, will continue to handle bond syndication at Barclays, the person added.