UG Investment, one of the oldest hedge funds specializing in Chinese markets, plans to open its first office outside greater China to increase investment in Southeast Asia in a move that would help it hedge against risks from any conflict between China and China. Taiwan.
The fund, which manages about $4 billion in assets, will open an office in Singapore, according to three people with knowledge of the details. It was launched in 1998 and currently operates from Taipei and Shanghai.
US-China tensions have increasingly focused on Taiwan, with Russia’s invasion of Ukraine in February fueling speculation that Beijing could seek to annex the democratically-ruled island in the coming years. China claims sovereignty over Taiwan, and the Chinese military has significantly increased its activity in the region over the past two years.
Two people with knowledge of UG’s plans said the risk of invasion was a factor in its decision to open an office in Singapore. Other factors included retaining talent and hiring new staff to invest in Southeast Asia, one of the people said.
UG’s management, including its chief investment officer Rachel Tsai, is not expected to move from Taiwan and the fund will not close its offices in greater China, according to one of the people.
UG COO Brandy Chen, who joined the JPMorgan hedge fund 13 years ago, visited Singapore in June to research regulatory licenses and office space, the person added.
UG said in response to a request for comment on his move to Singapore that the Financial Times report “did not truthfully reflect” his view, but did not elaborate.
Investment professionals in the region described the opening of an office in Singapore as a reasonable precaution.
A founder of another investment firm with ties to Taiwan and Hong Kong said it was a “prudent move” but added that he believed the risk of a Chinese invasion of Taiwan was minimal.
“Southeast Asia, especially Vietnam and Indonesia, is where Taiwanese money generally goes anyway,” he added.
Singapore is working to strengthen its reputation as a leading financial center in Asia. Hong Kong has historically been the main hub for global financial services groups in the region, but Beijing’s national security law and draconian pandemic control measures have damaged its reputation.
Singapore launched a new corporate structure in 2020 to encourage hedge funds to move assets.
One of the people with knowledge of the business described UG as one of the “best-kept secrets” of Asian hedge funds.
The low-profile fund was launched by Eugene Wang in 1998 with $20 million in seed capital after he left Taiwanese brokerage group Yuanta Securities. It was one of the first hedge funds in Taiwan and one of the first foreign investors in the Chinese markets.
It was granted a qualified foreign institutional investor license shortly after China launched the scheme in 2002, which allowed foreign investors to trade on the Shanghai and Shenzhen stock exchanges for the first time.