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The
move comes as some hedge fund managers around the world
including Jim Chanos and Kyle Bass have piled into short trades
against Chinese assets, amid fears the country's overleveraged
economy and ballooning bad bank loans are set to derail the
world's second-largest economy.
Bridgewater's China unit was set up in Shanghai's Free Trade
Zone on March 7, with registered capital of 50 million yuan
($7.67 million), the website of China's State Administration for
Industry & Commerce (SAIC) showed.
The SAIC filing cites Ray Dalio, the billionaire founder of
Bridgewater Associates, famous for anticipating the global
financial crisis of 2008-2009, as the registered legal
representative. Bridgewater operates a global macro investing
style based on economic trends.
"The move stands in stark contrast to the belligerently loud
claims among Ray Dalio’s hedge fund contemporaries, all of whom
are now crowded like sardines into the same China short trade,"
wrote analysts at Z-Ben Advisors, the Shanghai-based investment
consultancy, in a client research note published on Monday and
seen by Reuters.
Calls to Bridgewater's U.S. office to seek comment went
unanswered outside normal working hours. A U.S-based spokesman
for Bridgewater did not immediately respond to emailed requests
for comment out of business hours.
Bridgewater has set-up a Wholly Owned Foreign Entity, or WOFE, a
legal structure used by hundreds of U.S. hedge funds, including
Chicago-headquartered Citadel, that allows foreign companies to
set-up shop in China without having to partner with a local
firm.
The Bridgewater entity is licensed to perform investment
management and investment advisory, according to the
registration filing. Z-Ben predicted the hedge fund will use the
platform to launch onshore yuan fixed-income strategies.
Bridgewater's clients, large institutional investors, have very
little exposure to the yuan, "so this positions Bridgewater to
move at speed once global demand for RMB does finally
materialize," according to Z-Ben.
The U.S. hedge fund managed to secure its WOFE application just
ahead of a government clampdown on such entities following last
year's summer stock market crash, and a series of lending
scandals, which have raised fears the investment structure has
been abused.
(This story corrects Citadel headquarters as Chicago)
(Reporting by Samuel Shen in Shanghai and Michelle Price in Hong
Kong; Editing by John Ruwitch, Clarence Fernandez and Kim
Coghill)
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