- Chinese stocks saw largest daily net buying since ‘21: Goldman
- But, net allocations remain at lowest level in five years
Hedge funds rushed to buy Chinese equities in a bet that the country’s new stimulus program can boost growth in the world’s second-largest economy.
Chinese equities on Tuesday saw the largest daily net buying since March 2021 — the second largest amount in the past 10 years, according to Goldman Sachs Group Inc.’s prime brokerage report. Buying was driven almost entirely by investors who added long positions. While funds bought Chinese stocks across all types, the move was primely driven by A-shares and to a lesser extent H-shares.
Goldman Sachs | Source: Goldman Sachs
Chinese stocks soared Tuesday, with the CSI 300 and Shanghai Composite Index gaining 4%, after China’s central bank announced a slew of measures aimed at boosting the economy, the housing sector and the stock market.
Flows into Chinese stocks via options also rose. Goldman’s data show iShares China Large-Cap ETF (FXI) call-option open interest hit the highest level in a decade with an increase of about 580,000 contracts.
However, the stocks rally lost momentum on Wednesday as questions remain about whether Beijing is capable of reviving the market and the economy. China’s monetary stimulus measures are viewed as “enough to catalyze another policy-induced rally,” but “probably not enough to turn things around fundamentally, Goldman Sachs’ strategists including Kinger Lau said.
Goldman Sachs | Source: Goldman Sachs
Hedge funds have been skeptical about Chinese stocks for almost two years. Since the start of 2023, Chinese equities have been net sold by hedge funds and gross and net allocations are still at the lowest level in five years.
China’s CSI 300 Index is down less than 1% year-to-date, hovering at the lowest levels since 2019.
Written by: Natalia Kniazhevich @Bloomberg
The post “Hedge Funds Snap Up Chinese Equities on Stimulus Optimism” first appeared on Bloomberg