Hedge Funds in Emerging Markets

Hedge Funds in Emerging Markets

Hedge Funds in Emerging Markets

Hedge Funds in Emerging Markets

Synopsis

Largely exempt from regulation and shrouded in secrecy, "hedge funds" are one of the most controversial institutions in modern finance. Presenting a balanced view of the subject. De Brouwer explains their workings using case study material from Hong Kong, Indonesia, Malaysia, Singapore, Australia and New Zealand, from 1997 to 1998. He also considers the future of hedge funds, their role for institutional investors, as well as policy proposals to limit their destabilizing effects.

Excerpt

My interest in hedge funds in emerging markets was sparked by my involvement in the Study Group on Market Dynamics, which reported to the Financial Stability Forum Working Group on Highly Leveraged Institutions, in 1999. At the time I was Chief Manager, International Markets and Relations, at the Reserve Bank of Australia, a position I left when I became Professor of Economics at the Australian National University in January 2000.

Much of the information used in this book was collected at that time, in visits to Auckland, Hong Kong, Johannesburg, Kuala Lumpur, New York, Singapore, Sydney and Wellington. A lot of important information was also gathered after that, in visits as an academic to Bangkok, Singapore and Tokyo and in subsequent conversations with market participants and officials.

It is important to stress at the outset that I have not used confidential information collected while I was a central bank official or discussed official meetings in this book. I have consulted widely with officials from relevant national and international authorities about the material presented here, and I am confident that I have not breached any commercial or official confidence. This is not intended to implicate these people; not everyone I consulted necessarily agrees with my analysis and views.

I am deeply indebted to many people for their advice, assistance, information and support in writing this book. It could never have been written but for the willingness of hundreds of market participants and officials to talk, often frankly, about the activities of hedge funds, banks and securities companies in financial markets in 1997 and 1998.

I am grateful in the first instance to my former colleagues at the Reserve Bank of Australia, especially Ric Battelino, Stephen Grenville, Philip Lowe, Bob Rankin and Mike Sinclair. I am deeply indebted to the other members of the FSF Study Group on Market Dynamics, Charles Adams (International Monetary Fund, convenor), Herve Ferhani . . .

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