Mark Fuchs, chief executive of Singapore-based Fuchs Capital Partners, said in an interview with Dow Jones Newswires that he is launching a hedge fund focused on trading blue-chip, large-capitalized Southeast Asian stocks in the region in two months.

Fuchs, the former head of Credit Suisse Group's (CS) Southeast Asia equities division, has teamed up with two other Southeast Asian veterans: Winston Loke, who was previously Credit Suisse's Chief Operating Officer for Asia-Pacific ex-Japan, Australia equities and Mark Maroongroge, most recently a portfolio manager with London-based hedge fund HBK Capital Management. He declined to elaborate on the size of the fund, however, other than to say it will start off "modest" in size but would eventually be "significant."

"Everyone is investing in China and India because of the China-India story," said Fuchs. "But they (India and China) have an impact on the region's growth as well."

Southeast Asian countries' tourism industry benefits from increased outbound travel of Chinese tourists, he said, and their low-cost labor pool will eventually benefit from foreign companies switching out of China and India on cost concerns.

Fuchs - who until June last year also served on Credit Suisse's Chairman's Board for the Asia Pacific region - has been in the region for 15 years, and helped the Swiss bank built its equities business in Singapore, Malaysia, Thailand, Indonesia, the Philippines and Vietnam.Those are the areas, as well as Cambodia, eventually, that the fund will be investing in.

While many investors are still wary of expanding amid the economic slowdown, Fuchs said his experience in Southeast Asia allowed him to look past the bad news.

"This downturn allows us to get the first picks (of stocks and people)," he said. "The dislocation in value is unprecedented."

Even though the economic crisis this time around originated in the West, Asian bourses have fared worse, falling 50% last year, compared with the Dow Jones Industrial Average, which shed 34%.

Fuchs added that the wide range of economies in Southeast Asia would allow the fund to tap into businesses at every stage of the business cycle.

The Southeast Asian long-short equity fund counts high net worth individuals and institutions among its investors. Fuchs said the initial response from investors has been positive, but declined to disclose names of investors.

The global hedge fund industry has been marred by record investor redemptions, especially in the second half of last year, forcing many hedge funds to sell investments into falling markets or close. Hedge Fund Research said 693 funds, or 6.9% of the industry, had closed down in the first three quarters of 2008 as losses were compounded by record monthly withdrawals of about US$77 billion in September and October.
Source: Dow Jones