Stockholm-based fund house East Capital will shut its office in Shanghai and relocate its investment advisory staff to Hong Kong. The firm specialises in Eastern Europe and Chinese assets, but is seeking to widen its Asian exposure.
Partner and co-founder Karine Hirn and senior adviser Dmitriy Vlascov moved earlier this month from Shanghai to Hong Kong, which was previously solely a sales office. In addition, Adrian Pop, another senior adviser based in Stockholm, recently moved to Hong Kong.
These appointments bring the firm's total Hong Kong staff to six – three investment advisers and three sales people (including Hong Kong head Michael Hanson-Lawson). The latter trio is focused chiefly on selling Eastern Europe funds.
Closing the Shanghai office and making Hong Kong its Asian hub comes amid the firm’s initiatives to increase exposure to Southeast Asian markets, according to Hirn.
“Travelling in Southeast Asia out of Shanghai is not quite a good idea in terms of flight connections so Hong Kong was a better place,” Hirn tells AsianInvestor.
All of the firm's funds are managed in Stockholm, with some €200 million ($270 million) of the €4 billion firm’s total AUM invested in Asian equities, mainly in China.
Some 95% of the AUM is in Eastern European investments, including listed equities, real estate and private equity, but the firm will increase allocations to Southeast Asia by an unspecified amount this year.
After co-founding the firm in 1997, Hirn moved to Shanghai in 2010 to spearhead the group’s Asian investment efforts.
Vlascov joined the Hong Kong office in August, having been a senior analyst in Shanghai for three years covering China. He previously worked in Moscow as head of real estate research.
Meanwhile, Pop, who joined the group in Stockholm as an analyst to cover Turkey and Romania in 2005, moved to Hong Kong earlier this year to focus on Asean markets.
East Capital runs two funds out of Stockholm focused on the region: the China East Asia Fund, primarily focused on the mainland with some exposure to Southeast Asia and South Korea, and the China Fund purely invested in Hong Kong-listed Chinese companies.
The China East Asia Fund is down -0.27% year-to-date. Last year it returned 17% and in 2011, was down -15%. The China Fund is up 2.94% year-to-date, after posting a gain of 14% in 2012 and a drop of -12% in 2011.
Most of the investors in the Asian funds are located in Scandinavia, with institutional investors making up 70% and retail 30%.
Likewise, Asian investors account for a small portion of the Eastern European strategies, although East Capital is seeking to increase its institutional client base in the region.