Trend-following commodity trading adviser hedge funds have shifted their stance on Japanese equities, moving away from a bearish outlook to begin buying again late last week, according to a report by Channel News Asia.
The report cites a note from JP Morgan analysts as highlighting that CTAs likely reinstated their positions in Nikkei 225 and TOPIX futures around 15 August, following a recent selloff, as the rebound in the indices was deemed too significant to ignore.
This change in strategy happened sooner than JP Morgan had initially predicted, with analysts originally expecting that CTAs would adopt a cautious wait-and-see approach if the Nikkei index briefly recovered above the 35,000 mark after the early-August downturn.
The Nikkei 225 index has surged more than 20% since hitting a low on 5 August, when it experienced its largest single-day drop since 1987. By Friday, the index had closed above 38,000.
