HuntedRelated

The detention of “kamikaze” Chinese hedge fund manager Xu Xiang for alleged insider trading on Sunday after a dramatic manhunt was front-page news, but to industry insiders it was the chronicle of a downfall foretold.

Renowned as the “captain” of the “Limit-up Kamikaze Squad”, a loose-knit group of fund managers centred around the port city of Ningbo, Mr Xu favoured bets that were big, bold and bountiful. The squad’s nickname salutes its ability to push stocks up by the 10 per cent daily limit imposed by Chinese exchanges.

In a market where many investors believe riches elude those who play by the rules, Mr Xu’s Zexi Investment Management attracted scepticism. Five of Zexi’s products ranked among the top 20 in China by total return in 2015, with one taking the top spot. Its Series 1 fund has returned 3,270 per cent since launching in 2010.

“Xu getting caught was just a matter of time. It just came a bit earlier than expected,” said a hedge fund manager in Shanghai, adding that Mr Xu’s conduct had been “an open secret”.

Despite being ranked as China’s 188th richest person on the Hurun Rich List with wealth estimated at Rmb14bn ($2.2bn), little is known about the low-key Mr Xu and his fellow kamikazes. Until Sunday, no confirmed photos of him were available online.

But local media reports and interviews with fund managers paint a portrait of the squad as investors willing to operate at the frontiers of legality — and sometimes beyond — in the wild west of China’s capital markets.

the source