Several China-focused hedge funds have reported stellar returns for September, thanks to a significant rally in Chinese stocks following Beijing’s aggressive economic stimulus measures, according to a report by Reuters.
The stock surge, which saw China’s blue-chip CSI 300 Index jump by 25% over just five days last week, propelled Asian equity hedge funds to the top of global performance charts for the year.
The report cites a note from the prime brokerage division at Goldman Sachs as highlighting that China-focused stock-picking hedge funds posted a 6% return between 23 and 27 September, marking their best weekly performance on record. Broader Asian equity hedge funds have gained 12% so far this year, outpacing their global peers.
The biggest winner was Hong Kong-based Triata Capital, which recorded a staggering 44% return last month, bringing its year-to-date performance to 56%. The $770m fund benefited from long-term holdings in sectors such as data centres, internet giants, e-commerce, and travel firms.
Yunqi Capital’s China Fund meanwhile, also capitalised on the market rebound, posting a 26% gain before fees in September. Its investments in US-listed Chinese internet and fintech companies like Lufax Holdings and Qifu Technology paid off, alongside picks of firms increasing share buybacks and dividends.
The rally in Chinese equities comes after three years of underperformance, spurred by Beijing’s largest post-pandemic stimulus effort. The stimulus package, which includes interest rate cuts and a $114bn fund aimed at boosting markets, marks the most significant intervention since the 2008 Global Financial Crisis.
Not all funds benefited though, with Singapore-based Keystone Investors, which employs a low-net strategy involving both long and short positions on around 100 companies, lost 4.8% in September, reducing its year-to-date gains to 13.2%.
Short-sellers betting against offshore Chinese stocks may have incurred significant losses as well, with financial analytics firm S3 Partners estimating that short-sellers lost approximately $6.9bn during the last two weeks of September alone.
