Hedge funds fuel record weekly buying in Chinese stocks on stimulus cheer

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Hedge funds fuel record weekly buying in Chinese stocks on stimulus cheer

HONG KONG - Global hedge funds flocked to Chinese equities on the back of Beijing's much bigger than expected stimulus measures, leading to the strongest weekly buying on record, a note from Goldman Sachs showed.

The inflow was led by long positions, particularly into single stocks, with buying focusing on consumer, industrials, financials and information technology, the bank's prime brokerage team said in a report this week.Chinese stocks roared back and enjoyed their best weekly gain in over a decade after the government announced a broad stimulus package including interest rate cuts and a $114 billion war chest to boost share prices.

While underweighting Chinese equities had been the largest consensus trade for the past few years amid the gloomy economic outlook and geopolitical tensions, the tide is turning, investors and analysts say.According to LSEG Lipper data, foreign equity exchange-traded funds focusing on Chinese equities received inflows of $2.4 billion in the last three trading sessions of September, a sharp contrast to $2.7 billion in outflows from the start of the year to Sept. 25.

Foreign long-term investors showed a significant turnaround of sentiment with strong buying starting Thursday, Chong added.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events.

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