CNBC reports that hedge funds are selling stocks at a pace 'not seen in years'

CNBC reports that hedge funds are selling stocks at a pace 'not seen in years'

The financial world has been abuzz with news of hedge funds aggressively selling Chinese stocks, marking one of the largest net sellings in the past five years [1]. This sell-off, driven by concerns over China's property sector and weak economic data, has raised eyebrows among investors and analysts alike [1].

According to a recent Goldman Sachs report, global hedge funds sold Chinese stocks at an unprecedented pace during the week of October 2024, with A-shares, or those listed on the domestic stock market, leading the sell-off [1]. This massive sell-off is noteworthy, considering that it comes amidst growing optimism about Chinese equities and Beijing's recent stimulus measures [2].

The data from Goldman Sachs reveals that this is the largest net selling of Chinese equities over any 10-day period since October 2022 [1]. The sell-off was particularly significant in the A-share market, which comprises 60% of the total sell-off [1].

The reasons behind this sell-off are multifaceted. On one hand, concerns over China's property sector have been mounting, with Chinese real estate giants such as Country Garden seeking to delay payment on private onshore bonds [1]. Additionally, the Zhongrong International Trust Co, which traditionally had significant exposure to real estate, has missed some repayment obligations [1].

Furthermore, hedge funds are increasingly wary of their exposure to China, with a number of US-based hedge funds, including Coatue, D1 Capital, and Tiger Global, cutting their positions in Chinese stocks during the second quarter [1]. These cuts were made amidst concerns about China's economic prospects and escalating geopolitical tensions [1].

The sell-off is also notable given the recent optimism surrounding Chinese equities and Beijing's stimulus measures. In fact, global strategists at BlackRock and Goldman Sachs have recently upgraded their outlooks on Chinese equities [2].

In conclusion, the massive sell-off of Chinese stocks by hedge funds is a significant development that highlights growing concerns over China's economy. With concerns over the property sector, weak economic data, and geopolitical tensions, it remains to be seen how the Chinese stock market will fare in the coming months.

References:
[1] CNBC. (2024, October 10). Hedge funds aggressively sell Chinese stocks as growth outlook dims. Retrieved from https://www.cnbctv18.com/economy/hedge-funds-aggressively-sell-chinese-stocks-as-growth-outlook-dims-17536951.htm
[2] CNBC. (2024, October 10). Hedge funds sold record Chinese stocks on Tuesday, Goldman Sachs says. Retrieved from https://www.cnbctv18.com/market/hedge-funds-sold-record-chinese-stocks-on-tuesday-goldman-sachs-says-csi-300-shanghai-comp-19490620.htm