ASIA: Global hedge funds bet big on Chinese stocks after major stimulus

As published on: ig.com, Friday 4 October, 2024. 

Global hedge funds are diving into Chinese stocks, spurred by Beijing’s massive stimulus measures – leading to the best weekly gains for Chinese equities in over a decade.

What does this mean?
During the week of September 23-27, hedge funds significantly increased their Chinese stock investments following Beijing’s expansive stimulus package. According to Goldman Sachs, hedge funds’ allocation to Chinese equities that week was the highest since records began in 2016.

Targeted investments: long positions in single stocks across sectors like consumer goods, industrials, financials, and technology
Sales: minor sales were seen only in the energy sector.
Market impact
Chinese stocks saw their best weekly gain in over ten years, driven by:

Interest rate cuts
A $114 billion fund to lift share prices
First-tier cities lifting home purchase restrictions.
Both the CSI 300 and Shanghai Composite indices experienced their biggest single-day gains since 2008.

Why should I care?
For markets: Chinese stocks on the rise.

The substantial increase in investments drove China-focused stock-picking hedge funds to a 6% return last week, their best on Goldman Sachs’ record. Year-to-date gains for these funds now stand at 12.8%.

Beyond hedge funds, foreign long-term investors also upped their positions, fearing they might miss out on the rally. According to LSEG Lipper data:

$2.4 billion inflows to foreign equity ETFs focusing on Chinese stocks in the last three trading days of September
This marks a sharp contrast to the $2.7 billion outflows earlier this year
The bigger picture: a shift in global sentiment.

Ahead of the National Day holiday, a notable uptick in buying interest in Chinese stocks indicated a potential global sentiment shift. A senior markets strategist for APAC at BNY Mellon highlighted the renewed investor confidence.

With Beijing’s broad stimulus measures driving a remarkable stock market recovery, the major index gains suggest global investors are identifying new opportunities in China. This reflects a broader optimism about the country’s economic future.

30 May 2024

IRELAND: Ireland agrees to global tax deal, sacrificing prized low rate

Ireland dropped its opposition to an overhaul of global corporate tax rules on Thursday, agreeing to give up its prized 12.5% tax for large multinationals in a major boost to efforts to impose a minimum

Read More
12 June 2024

HONG KONG: Hong Kong International Arbitration Centre unveils new rules

The new 2024 Administered Arbitration Rules of the Hong International Arbitration Centre (HKIAC) came into force on 1 June 2024 and contain significant revisions. The new provisions aim to enhance the

Read More
22 November 2024

CAREY OLSEN: Carey Olsen advises on sale of SandpiperCI’s food retail business to Morrisons

Press Release from Carey Olsen, Friday 22 November, 2024. Carey Olsen has advised retail and food and beverage operator SandpiperCI on the sale of part of its Channel Islands food retail business to

Read More
14 March 2024

Carey Olsen and Oakbridge advise Sullivan Street Partners on Wave Group investment

Press Release from Carey Olsen, Thursday 14 March, 2024.  Carey Olsen and Oakbridge have together assisted private equity investor Sullivan Street Partners with its development capital investment into

Read More