
DEAR HEDGE FUNDS MANAGERS
Although hedging is done 'discreetly' by some 'hedge fund managers', I still think that Malaysia (in particular SC) should keep a close surveillance by having a revised version of regulations to monitor private equity company's especially. I heard stories from some European friends that EC has come out with such regulations. Finally EC has come to its senses and limit of patience. (the line must be drawn here..this far..no further...) Anything > 1:1 leverage is only a 'rumour' and excuse being protective but if you go on being stubborn about it - it may be 'the end' of private equity...(trust me)
I know that many may disagree with me and they are willing to see me to debate endlessly on the subject (hey..you guys are forgetting, I am well aware of the mechanisms..ok?) Everyone involve in hedge fund in Malaysia in whatever capacity should know better what's going on this world today. Even the most popular and oldest Rolodex is slowing down..so, you should think twice before moving on...(not to mention Alpha, Pequot and Andor - possible shut down is expected)
Bursa Malaysia is just showing the signs of curing but if you should all know the danger of 'reopening old wounds'...look around you..do you care? Volatile price, foreclosure even unemployment (not to mention crime rates) etc can be translated into 'not favouring' the hedge funds...in short - 'losses'!! But so many of us claimed that hedge funds is not the cause but quoting European policymakers :
"They many have exacerbated it by fueling bubbles with leveraged investments in the good times and then offloading assets by the bucket-load in the bad times"
Many people follow your assurance that they'll be making money but they didn't actually get what they should be getting - but most of you fund managers love to blame 'the economic crisis'...what an absurd statement! (excuse me!) You are 'hedging'!! (making money in down markets - this doesn't work anymore..face it!) Traders and portfolio managers have been sending e-mails to me that they are loosing money out of their pockets...ask them why? (20% on top of 2% management fee? Ring a bell?)
But despite of all these talks of mine - I ain't implying that hedge fund is no good but during unsuitable times like today, something should be done either follow the rules 'religiously' or off you go! Why Nik? Here's my answer : it's almost 1998 all over again...and I'm sure you don't want this to reoccur. 1998 is not because of hedge funds but a proper regulations were not really there yet.
So, what sort of regulations Nik? You have ideas? Ok..first of all private equity and hedge funds 'people' must be transparent from now on...no more 'disreet'..no more 'classified'..no more 'confidentiality'. I know sometimes taxation is a big issue to you but give it a thought for just a short while - give your lending ears to listen to what I have to say before you click 'x' on this blog.
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Initial proposal from Nik Zafri to anyone out there reading my blog - who wish to listen :
You must first reveal your plan (To the proper authorities..I don't know..maybe SC, Inland Revenue, BNM) on:
a) managing level of capital,
b) managing risk,
c) valuation of assets and most important
d) your strategy in doing business.
2nd - STOP NOW if you're involved in any trade relating to MONEY LAUNDERING!! (so, is this the thing you're being discreet about?) Get out now before it's too late!
3rd - It's time to pay based on gains not losses!! Otherwise, we will go back to square 1...make money during down market..gosh...
Having this sort of regulations may help our economic recovery further but of course if the regulations are not strict enough and having loopholes...definitely there can be abuse - some people in the market will always creatively found a way to do 'evasive maneuvers'
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More to come...