Alternative Investment Management Association
26 September 2008
Singapore, 26 September 2008 - AIMA Singapore congratulates regulators in jurisdictions such as Hong Kong, Japan, and Singapore, that have maintained or minimally modified their short-selling regulations. It points out that the hedge fund industry in aggregate has done an excellent job for investors during the current crisis.
The source of this current crisis stems from a range of sources, including commercial banks, investment banks, and rating agencies. Generally the alternative asset management sector has done an excellent job of managing and mitigating market risk, and continues to do so.
Short-selling is not and has not been a contributor to this crisis, but on the contrary assists sophisticated investors, including not only hedge funds but also pension funds, insurance companies, and other institutional investors, in mitigating its effects.
Short-selling of equities is a legitimate practice and it is pivotal in enabling efficient and liquid financial markets. Many global pension and insurance funds use short-selling to hedge their portfolio exposure, and these restrictions increases the market risk for these long term investors at a time when their beneficiaries need the protection most.
Peter Douglas CAIA, Asian representative to the AIMA Council, said: “Banning or restricting short-selling reduces market liquidity, impairs price discovery, and makes it more difficult for investors of all types to mitigate risk. These effects are particularly unwelcome at this time of stress in financial markets.”
Michael Coleman, the newly elected Chairman of the Singapore National Group of AIMA, added “In 2007, the global hedge fund industry made more money for its investors than the aggregate value destroyed by the world’s banking sector; this year, many hedge funds are making money for their investors, and while the average hedge fund is down 5% for the year (HFRI Fund Composite), this is clearly a strong result compared to 16% market falls (MSCI AC World).”
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For further information from AIMA Singapore, please contact:
Tel: +65 6225 4985
Sue Lynn Oliveiro
Tel: +65 6225 4985
Notes to editors:
AIMA, the Alternative Investment Management Association, has over 1,280 corporate members worldwide, based in 47 countries. Members include leading hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting services and fund administrators. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators, worldwide.
AIMA is a dynamic organisation that reflects its membership’s interests and provides them with a vibrant global network. AIMA is committed to developing industry skills and education standards and is a cofounder of the Chartered Alternative Investment Analyst designation (CAIA) – the industry’s first and only specialised educational standard for alternative investment specialists. For further information, please visit AIMA’s website at www.aima.org
About AIMA Singapore
AIMA’s Singapore branch currently has 62 corporate members, including hedge fund managers, fund of fund managers, prime brokers, fund administrators, lawyers, auditors and institutional investors. AIMA Singapore aims to deliver AIMA’s global initiatives to members located in Singapore thereby providing a unified voice for them and increasing investor education, transparency and due diligence for the industry.