Hong Kong-based asset manager Anatole is preparing to move the core of its business to Singapore, after telling investors it has significantly cut its exposure to China.
The firm, which made its name with outsized bets on China’s growth, is opening an office in the city-state and may move key operations and decisions there, three people familiar with the discussions said.
Many Asia-based hedge fund managers have been hit hard by Chinese President Xi Jinping’s years-long regulatory crackdown on a range of sectors from technology to property.
Proximity to the mainland through a Hong Kong base has become less important for managers like Anatole as they diversify into fast-growing south-east Asia, home to 655 million people and featuring Singapore as a regional financial hub.
Anatole may keep a smaller presence in Hong Kong, to try to avoid falling out of favor with China where it still has its biggest exposure, one of the people said.
“Nervous system is probably going to be in Singapore,” another person briefed on the talks said, though they said the decision had not been finalized and the situation could change. The company was registered in Singapore in February, according to records with the city’s accounting authority.
Anatole Chief Operating Officer Gary Lee confirmed the group has opened an office in Singapore. He said the office would be an “outpost”, adding that he remained “enthusiastic about China’s 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 or leave in Hong Kong.
“We will retain the resources we see fit to fully exploit the potential of the investment opportunity,” Lee told the Financial Times.
Since its founding in 2016, Anatole has focused on long-term investments in Chinese companies and its funds have managed about $2 billion, according to Bloomberg. However, Yang, Anatole’s chief investment officer, said last year that he was considering new “hunting grounds”.
Anatole told investors that its flagship hedge fund had suffered huge losses by miscalculating the world’s second-largest economy. Chinese stocks plunged in 2022 as China’s economy stalled during the coronavirus pandemic and after the central government launched a regulatory crackdown on the internet, property and education sectors.
Singapore is rivaling Hong Kong as Asia’s financial center and has benefited from the aftermath of closed borders at the height of the pandemic. Geopolitical tensions have also increased the city-state’s appeal as a neutral financial outpost and haven for global capital – including from China.
While many financiers and law firms have added staff and expanded their offices in the city-state, Singapore has lagged behind in capturing more hedge fund business.
“Singapore is generally where you manage money, Hong Kong is where you make money. That is slowly changing,” said one financier.