LONDON (Reuters) – Hedge funds bought up battered Chinese stocks over three days last week at the fastest pace in more than five years, Goldman Sachs said in a note to clients.
In a note published on Friday and seen by Reuters on Monday, Goldman said its cumulative net purchases of Chinese stocks from January 23 to 25 were the largest three-day buy in more than five years. It was written that it became.
The increased hedge fund interest in Chinese stocks comes as the Chinese government steps up efforts to restore confidence in the world's second-largest economy, which has been hit by a crisis in its real estate sector and weak growth. .
Hong Kong's blue-chip index rose 6% in the three trading sessions since Tuesday, while Shanghai's Composite Stock Index rose more than 3%.
The turnaround in sentiment comes after a long period in which hedge funds took mostly bearish views on Chinese stocks falling in eight of the past 10 weeks.
Most of last week's moves reflected hedge funds taking outright long positions, betting that the stock would rise, rather than unwinding short positions.
According to Goldman Sachs, hedge funds have been accumulating in U.S.-listed stocks (ADRs) of foreign companies primarily as a way to buy Chinese stocks.
This was followed by the purchase of mainland A shares and Hong Kong-listed Chinese companies, or H shares, the memo said.
More broadly, emerging markets in Asia saw the largest net buying in more than five years, with China by far the most heavily bought market in the week ending January 25, followed by Taiwan and India. the paper added.
Changes in hedge funds' attitudes toward China add to the signs that a shift in sentiment may be occurring.
Goldman Sachs and Bank of America said in a separate note, citing EPFR data from last week, that investors poured about $12 billion into Chinese stock funds in the week ending Wednesday, the largest and biggest increase since 2015. It was announced that this was the second largest inflow in history.
Goldman's note added that this inflow was primarily via exchange-traded funds (ETFs) within China.
Still, overall Chinese stock positioning remains at a five-year low for both hedge funds and mutual funds, Goldman added.
Citing EPFR data, Goldman said the mutual fund's historical holdings had a 5.5% allocation to China at the end of December, the lowest level in a decade.
Goldman said it remains “positive” on Chinese stocks.
(Reporting by Nell Mackenzie; Additional reporting by Summer Shen in Hong Kong; Editing by Dhara Ranasinghe and Hugh Lawson)
