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Bridgewater Associates, the world's largest hedge fund with around $150 billion in assets under management, has set up an investment management unit in Shanghai, according to a Chinese government website filing, signaling that the firm is looking to expand its bets on China.
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.