This paper builds on earlier reputation models and investigates fund manager's response when given an exogenous signal capital control signal by the Bank of Thailand (BOT). In so doing, this paper seeks to test out three hypotheses 1) the Waitand-see hypothesis 2) the Signaling Hypothesis, and 3) Separating Equilibrium. Using a novel fund-level dataset by the Emerging Portfolio Fund Research (EPFR)1 dating from 2003-2013 in six Emerging Asia countries; Korea, Malaysia, Taiwan, Indonesia, The Philippines, and Thailand and a higher frequency Capital Control Index (CCI), we find that a separating equilibrium outcome in portfolio investment patterns of mutual fund managers can result; skilled fund managers try to separate themselves from the pool by taking excessive risk through their portfolio choices. The finding shed lights on how macroeconomics policy results in idiosyncratic response of individual agents that can be used to assess potentially distortion to the overall welfare. 1 This dataset is by far the most comprehensive resource for portfolio investment data, used in several research works by the International Monetary Fund, European Central Bank, and academic institutions.