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Hedge funds withdraw from onshore Chinese stocks

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Hedge funds are retreating from yuan-denominated onshore Chinese stocks, and are instead piling into Chinese shares listed in Hong Kong and New York, according to a report by the South China Morning Post.

Hedge funds have reportedly clawed back close to half of the money spent on Chinese onshore stocks linked to the zero-Covid pivot there, Goldman Sachs data shows.

Following a retreat in March, the cutbacks by hedge funds represent some 43% of the purchases they made from November last year to January, Goldman Sachs said in a report last week.

As a result, net allocations to China have declined to 11.1% of their books on average, from as high as 13.3% in late January.

The three-month period coincided with China’s zero-Covid pivot, or so-called reopening playbook, during which the benchmark CSI 300 Index jumped 18% and its market capitalisation ballooned by 3.6 billion yuan, or $522 billion.

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