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UBS predicts up to $30bn CTA stock sell-off

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Commodity trend advisers (CTAs), hedge funds that use computer algorithms to trade equities inline with movements in stock prices, will soon begin offloading shares worth between $20bn and $30bn, according to a report by Reuters.

The report cites a note from UBS seen by Reuters as predicting that as the stock market retreats, the sell-off will happen over the next two weeks as CTAs switch from a neutral stance on equities from they previously bullish position.

The bank says that if its prediction is correct, CTAs will be net short equity markets for the first time since November 2022.

US stocks fell 3.6% in Q3, their first quarterly decline of the year, as investors adjusted to the US Federal Reserve’s higher for longer interest rates strategy and rising oil prices.

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