Hong Kong-based asset manager Anatole is preparing to shift a key part of its business to Singapore, after telling investors it had significantly cut its exposure to China.
The firm, which made its name through outsized bets on China’s growth, is opening an office in the city-state and may move key functions and decision-making there, said three people familiar with the discussions.
Many Asia-based hedge fund managers were left nursing large losses following a years-long regulatory assault by Chinese president Xi Jinping on multiple sectors from technology to property.
Proximity to the mainland through a Hong Kong base has become less crucial for managers such as Anatole as they diversify into fast-growing south-east Asia, home to 655mn people and featuring Singapore as a regional financial hub.
Anatole may keep a smaller presence in Hong Kong, in part to try to avoid falling out of favour in China where it still has its largest exposure, said one of the people.
“The nervous system is likely going to be in Singapore,” said another person briefed on the negotiations, though they added that the decision had not been finalised and the situation could change. The company registered in Singapore in February, according to the city’s accounting authority records.
Gary Lee, Anatole’s chief operating officer, confirmed the group was opening a Singapore office. He said the office would be an “outpost”, adding that he remained “bullish on the China recovery”.
Lee declined to say how staff would be split between the two locations, whether he and founding partner George Yang would move to Singapore and whether there would be lay-offs in Hong Kong.
“We will maintain the resources we see fit to fully utilise the potential of the investment opportunity,” Lee told the Financial Times.
Since its inception in 2016, Anatole had focused on long-term investments in Chinese companies and its fund manages about $2bn, according to Bloomberg. However, last year Yang, Anatole’s chief investment officer, said it was considering fresh “hunting grounds”.
Anatole had told investors then that its flagship hedge fund had incurred large losses after misjudging the world’s second-largest economy. Chinese stocks plunged in 2022 as China’s economy ground to a halt during the coronavirus pandemic and after the central government launched a regulatory crackdown on the internet, property and education sectors.
Singapore is rivalling Hong Kong as a financial centre in Asia and has benefited from the latter suffering closed borders during the height of the pandemic. Geopolitical tensions have also increased the city-state’s attraction as a neutral financial outpost and haven for global capital — including from China.
While a number of financiers and law firms have added employees and expanded their offices in the city-state, Singapore has lagged behind in capturing more hedge fund business.
“Singapore is typically where you manage money, Hong Kong is where you make money. That is slowly changing,” said one financier.