Lull in Asia hedge launches to end soon

By Jeffrey Hodgson

HONG KONG (Reuters) - Asia's hedge fund managers are poised to launch a flurry of new funds after a temporary lull during the financial market selloff in the second quarter, two partners with law firm Walkers said.

The Cayman Islands-based firm provides legal advice for hedge fund managers looking to register in offshore jurisdictions.

"We did see a drop-off because of the May-June sell-down. Whether an individual manager performed well or badly during that period, in some senses, could be irrelevant to the launch of new funds," Philip Millward, a partner with the firm's Hong Kong office, said at the Reuters Wealth Management Summit late Tuesday.

"Three or four months have expired since that sell-down and investor sentiment seems to be picking up again, and you'll see the launch of more hedge funds toward the end of the year."

Global stock markets hit multi-year peaks in May, then fell sharply, with the MSCI world index .MSCIWD at one point losing as much as 11 percent.

The law firm, which has offices in the British Virgin Islands, Dubai, Hong Kong, Jersey and London, expects minimal regulatory fallout in Asia from the unraveling of Amaranth Advisors LLC, a Greenwich, Connecticut-based hedge fund manager. Amaranth suffered a $6 billion loss last month in wrong-way bets on natural gas derivatives.

"It's clear that when there are blowups, as indeed there will be from time to time, there always is the hue and cry for greater regulation, as opposed to leaving things as they are and letting managers, counterparties and investors regulate themselves," said Carol Hall, another Walkers partner.

"We can expect to see ripples in Asia and around the world. Most probably we'll see best practice as opposed to greater regulation."  Continued...