FORMER Long-Term Capital Management (LTCM) executives have started a firm that will connect Chinese investors with international hedge funds, as turmoil in the world’s second-largest equities market spurs demand for overseas assets.

    John Meriwether is an early financial backer of Shanghai-based Sycamore Investment Services, said chief executive officer Jeff Li, who formerly worked as a strategist at LTCM.

    Huang Chi-fu, who co-headed the Asia office of LTCM’s hedge fund that collapsed in 1998, is one of the founders of Sycamore and also an investor, Li said.

    Sycamore is officially opening for business later this month, joining firms such as Springs Capital and Noah Holdings Ltd. in helping Chinese investors gain access to international investments as the nation makes gradual moves to open its capital account.

    The need to spread assets more widely has been underscored by a volatile stock market and a currency that’s falling against the U.S. dollar, with options traders betting on more declines.

    “Chinese investors have growing demands for the alternative assets both within the country and in overseas markets,” Li said. “With the gradual opening of the capital market and yuan liberalization, two-way cross-border investment becomes possible.”

    LTCM, which assembled a team of top Salomon Brothers Inc. traders and Nobel laureates and led by Meriwether, roiled global markets in 1998 after losing more than 90 percent of its US$4.8 billion in assets in the weeks following Russia’s currency devaluation and bond default.

    The U.S. Federal Reserve orchestrated a US$3.6 billion bailout by the fund’s 14 banks to calm fears that the firm’s lenders and trading partners would be dragged down.

    (SD-Agencies)