Global hedge funds ramped up their purchases of Chinese stocks last week, spurred by Beijing’s unexpectedly wide-ranging package of economic stimulus measures, resulting in the strongest week of acquisitions on record, according to a report by Reuters.
The report cites a client note from the prime brokerage division at Goldman Sachs as highlighting that hedge funds significantly increased their exposure to the world’s second-largest economy during the week of 23-27 September, marking the highest weekly buying of Chinese equities since Goldman Sachs began tracking this data in 2016.
The inflow was primarily driven by long positions in individual stocks, with a particular focus on consumer, industrials, financials, and information technology sectors, Goldman’s prime brokerage team reported. The energy sector was the only area that saw a slight reduction in hedge fund interest.
Chinese stocks rebounded strongly, achieving their best weekly performance in over a decade after the government announced an extensive stimulus package that included interest rate cuts and a $114bn initiative to support share prices.
The buying frenzy continued into this week as major cities in China moved to relax restrictions on home purchases, with the benchmark CSI 300 and Shanghai Composite Indexes on Monday then posting their biggest single-day gains since 2008.
The surge in equities also fuelled a big gains for China-focused stock-picking hedge funds, which posted a 6% return last week – their best weekly gain since Goldman Sachs began tracking their performance. Year-to-date, these funds have recorded an estimated 12.8% gain.
