Global hedge funds snapped up Chinese equities following the politburo meeting this week, buying on Tuesday at their fastest pace since October 2022, Goldman Sachs said in report.
The higher inflows were led by mainland A-shares and then Hong Kong-listed shares, while U.S.-listed Chinese American Depositary Receipts (ADRs), mainly internet companies, saw smaller inflows, the report added.
They did not give any further details on the volume, but highlighted that inflows were driven by long-buys and to a lesser extent short covers.
Sectors including consumer discretionary, staples, financials, materials and industrials attracted the largest purchase by hedge funds tracked by Goldman Sachs.
Chinese stocks rebounded this week as policymakers at the latest Politburo meeting clearly expressed support for capital markets and signalled the introduction of bigger easing measures to drive the economy.
Hong Kong’s Hang Seng Index rose 3% while China’s CSI 300 Index gained 2% this week. Both markets have largely underperformed major global indexes so far this year.
Global investors have been pulling out of China in the past few months, worried about the slower-than-expected, post-pandemic economic recovery and renewed Sino-U.S. tensions.
Goldman Sachs said hedge funds’ exposure to Chinese equities remained at around the low levels last seen in November 2022 and well below five-year averages.
Sentiment, however, appears to be picking up in July. Net foreign buying in mainland Chinese equities through the China-Hong Kong Stock Connect programme recorded 20 billion yuan so far this month, their best month since April, official data shows.
