Bank of America Merrill Lynch is helping more than a dozen big international hedge funds set up or re-enter Hong Kong and Singapore, tempted by a perceived more liberal environment to regulation than in the US and Europe, Bloomberg reported.

A number of funds of hedge funds are also planning offices in the Asian cities, Dan McNicholas, head of Asia financing sales at Merrill Lynch said in an interview with the news service. He did not identify specific funds.

The regulatory climate in Hong Kong, for example, is relatively light-touch compared with what is due to take effect in Europe and the US. In London, for example, the city’s financial services industry has warned that proposed European Union regulations on hedge funds will drive these investment vehicles away.

The comments also throw light on how the broader wealth management sector is looking at the most favourable places in which to do business in the near to medium term, with Asia frequently coming top of the list in terms of attractiveness from a tax and regulation point of view.

“When you compare to New York or London, the business environment has been very friendly for managers,” Mr McNicholas was quoted as saying. In New York and London “you are seeing tax proposed and other restrictions on business that may make Hong Kong and Singapore attractive.”

Asia is also expected to absorb a larger proportion of global hedge fund inflows than it historically received as funds need to correct their under-allocations to the region, he said. More than 15 per cent of the $50 billion to $100 billion of hedge fund inflows expected in the first quarter may go to Asia, Mr McNicholas said.