Goldman says hedge funds have clawed back 43 per cent of money spent on buying Chinese onshore stocks linked to zero-Covid pivot
- Instead, they prefer Chinese shares listed in Hong Kong and New York, Goldman Sachs says in report
- ‘For the onshore markets, there’s no bright spot except some thematic investment, so no fresh funds will pile in,’ Shanghai-based fund manager says
After another retreat in March, the cutbacks by hedge funds have amounted to 43 per cent of the purchases they made from November last year to January, Goldman Sachs said in a report last week. As a result, their net allocations to China have declined to 11.1 per cent of their books on average, from as high as 13.3 per cent on January 25.
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 per cent and its market capitalisation ballooned by 3.6 billion yuan (US$522 billion).
“China’s pivot to support the private sector has bolstered the risk appetite for offshore stocks,” said Dai Ming, a fund manager in Shanghai at Huichen Asset Management. “For the onshore markets, there’s no bright spot except some thematic investment, so no fresh funds will pile in.”
03:24
China’s new premier Li Qiang outlines priorities in first press conference
The CSI 300 fell 0.6 per cent on Monday to retreat from a five-week high, while gauges tracking stocks in the Shanghai and Shenzhen bourses also tumbled, after the state-run Economic Daily called for regulatory oversight following a rally in technology stocks fuelled by ChatGPT and the Micron chip investigation.
Despite the hedge funds’ retreat, China stock strategists from Goldman Sachs to Bank of America and Morgan Stanley continue to favour China’s A-share market, amid expectations that it will profit from Beijing’s pro-growth and business-friendly policy signals.
