Emerging Markets Research
Interview - Emerging Markets Research
I sometimes get email from hedge fund managers and portfolio managers looking for certain types of equity or industry research for their fund. Most hedge funds currently use and are in constant need of high end unbiased qualitative and quantitative research to identify and evaluate opportunities in the global markets.
Many of these opportunities are now being found in both emerging markets of MENA, China and SE Asia as well as emerging alternative asset classes. There are few quality research options for hedge funds investing within these spaces. Last week I met a few members of the Hedge Fund Group (HFG) who are partners of a research firm which has experience in researching and analyzing opportunities in these markets. They specialize in providing investment research on areas where information is usually hard to find and validate and language barriers exist. Their firm is called SG Analytics (www.sganalytics.com) and they are based in Pune, India.
Structured to serve money managers with unbiased investment research on both strategic and quantitative fronts, SG Analytics (referred to also as SGA) has clients amongst the top money managers, hedge funds, investment banks and private equity funds. SGA already counts 3 of the top 10 investment banks as its client currently. Most of SGA's hedge fund clients come from the Long/Short equity, global macro and distressed debt space and SGA supports them in making long term judgments based on fundamental research. Many money managers we have talked to, use SGA to cover small to mid caps or emerging market securities.
I would like to introduce this firm to the readers of my hedge fund blog because their team of 100 professionals offers a unique set of industry research services that many hedge funds could probably benefit from. SGA is not a plain vanilla outsourcing firm but a provider of end to end research and analysis that can stand on its own. Contrary to other conventional outsourcing service providers, the SGA team consists of experienced qualitative and quantitative research analysts from the local talent pool as well as from the developed financial markets of Europe and US. This blend of experience is unique and powerful as it leverages the well developed research practices of the developed western countries with talent which understands the emerging markets well. The management of the company also brings 50+ years of global work experience in the financial markets and is passionate in its commitment to deliver high quality relevant investment research to its clients. Here is my short interview with the CEO of SGA.
Richard: What are the top 2 challenges for hedge fund managers investing in China and India? There seems to be a slew of language, regulatory, culture, news, on the ground research challenges that I know many small and mid-sized hedge funds are struggling with right now.
Sushant (SGA CEO): One of the main issues which still remain for Hedge fund mangers investing in India and China is the evolving regulatory environment which limits their options both in terms of strategies (e.g. limited use of shorting) and liquidity (e.g. limited choice beyond the large caps). The other challenge of course, is to penetrate the perception and find reality which is often difficult given the fact that on-the ground and fundamental unbiased research is still an evolving culture and business here.
Richard: What trends are you seeing in hedge funds using research services such as yours to invest in emerging markets? Are more hedge fund managers using your services while looking for in-depth coverage of certain stocks and sectors to test the waters for future products or are most hedge funds looking to bulk up research for already existing products?
Sushant: We see a great response for services such as ours where we can provide Hedge funds with an extension to their research team rather than ‘outsourcing solutions’. Companies who have the capability to connect with the Hedge funds managers at their level of understanding are bound to do well, while the ones who are limited to being outsourced number crunchers will be of limited use for Hedge funds. One key requirement from Hedge funds is fast response which one can only do with deep domain understanding. With the days of heady returns behind us, we expect further emphasis on fundamental research to uncover investment opportunities in the years to come.
Richard: Thank you for your time today Sushant. Where can readers of my blog learn more about your firm or contact you directly?
Sushant Gupta, CEO
SG Analytics Pvt Ltd
Tele : +91 20 25665306/25661897
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