strongFinancial News/strongbr /br /Jason Corcoran in Moscow br /28 November 2008 br /br /br /Swedish fund manager East Capital has cut its personnel by a fifth following a 70% slide in its core equity market of Russia over the past two months.br /br /The 40 jobs cuts from East Capital’s overall headcount of 225 indicate how the financial crisis in Russia is spreading from investment banks to the buyside. br /br /The Stockholm-based manager said 20 jobs in Sweden would be affected and the remainder in its international offices in Moscow and elsewhere in the CIS. br /br /A statement from East Capital said: “Like many others in these turbulent times, we are carrying out an organisational review…We need to adapt to the new reality.”br /br /Hedge funds operating throughout Russia and the CIS are cutting their headcounts and slashing costs following sharp falls in equity prices and increases in clients redeeming their accounts. br /br /Prosperity Capital, previously the leading Russian fund manager, has seen its assets under management shrink to $1.5bn (€1.1bn) from over $5bn over the past few months. It’s $1.2bn Russia equity fund has fallen to $400m due to the drop in equity values. br /br /Prosperity’s chief executive Mattias Westmann told Financial News that Prosperity had posted some inflows from new clients and little in the way of redemptions. br /br /He said: “We have not closed any funds but we are trying to cut costs in general. No personnel has been affected so far as we have always been a pretty low cost operation.” br /br /Prosperity, which was established in 1996, employs just 25 people in Moscow and London. br /br /The closure last month of a Russian hedge fund run by Florin Investment Management has led to fears many more could go under as investors flee emerging markets.br /br /The closure in October of Florin FSU Credit Opportunities Fund, which was invested in real estate and equity collateralised debt, led to 10 lay-offs at the firm in Moscow and Londonbr /br /Another Russian hedge fund, Denholm Hall Russian Arbitage Fund, announced it was considering a restructuring following difficulties. In a letter to investors, Denholm said it was conducting a review of “of the collateral of our loans, the liquidity of our borrowers, the health of the underlying businesses and our hedging strategy”.br /br /Meanwhile Da Vinci Capital, which conducted an initial public offering on London’s junior Aim market in May, has launched a crisis opportunities fund. br /br /Da Vinci’s long-short hedge fund has suffered from redemptions and has fallen to just $15m and it’s managers are considering winding it up.

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