Hedge Funds Dump China Stocks Over Property, US Tech War Worry


Global hedge funds “aggressively” sold Chinese stocks amid heightened concerns over the country’s property sector and a weak batch of economic data, a Goldman Sachs report showed on Tuesday.

All types of stocks were sold in early August, but A-shares, those listed in the domestic stock market, led the sell-off, comprising 60% of it, the bank said.

“Hedge funds have net sold Chinese stocks in eight of the last 10 sessions on the prime book through 8/14,” it said, adding its clients divested both their long and short positions.


Also read: China Offers Foreign Investors Safeguards to Lure in Funds


Biggest net selling since October

This is the largest net selling in Chinese equities over any 10-day period since October 2022 and one of the steepest moves in the past five years.

Hedge funds sold 70% of what they bought in the first 5 days after the July 24 Politburo meeting on stimulus hopes, Goldman Sachs estimated.

Goldman Sachs, as one of the biggest providers of lending and trading services through its prime brokerage unit to investors, is able to track hedge funds’ investment trends.

Hedge funds have been increasingly wary of their exposure to China.

A raft of US-based hedge funds, including Coatue, D1 Capital and Tiger Global, cut their positions in Chinese stocks in the second quarter, as the country’s economic prospects already seemed to wobble and geopolitical tension increased, securities filings showed on Monday.


Slashing tech holdings

US President Joe Biden’s executive order to prohibit some US technology investments in China caused some investors to further reduce their exposure to the world’s second largest economy.

A UBS report on Monday showed China’s semiconductor sector has been sold significantly by hedge funds in the past two weeks.

The New York-listed KraneShares CSI China Internet ETF, which offers exposure to China’s largest internet companies such as Tencent and Alibaba, slumped 12% in August, the biggest monthly decline since February.

Global investors have also raised concern about China’s economy as a confluence of recent events has darkened its economic outlook, and the policy response is viewed as insufficient.

On Tuesday, a broad array of Chinese economic data highlighted intensifying pressure on the economy from multiple fronts, prompting Beijing to cut key policy rates to shore up activity.

Chinese property giant Country Garden is seeking to delay payment on a private onshore bond and a major Chinese trust company that traditionally had sizable exposure to real estate, Zhongrong International Trust Co, has missed some repayment obligations.


  • Reuters, with additional editing by Vishakha Saxena


Also read:


China’s $13tn Provincial Debt Crisis Threatens to Spill Over


Biden Likens China to ‘Ticking Time Bomb’ Due to Economic Woes


Move to Tone Down ‘China Risk’ Warnings May Spur SEC Queries


US Investors Fear China Backlash Over Biden’s Tech Curbs


China’s Dalian Wanda May be Next Property Giant to Fall


Over 100 Chinese Cities Battling to Repay Their Debts: Rhodium


Big Funds Eye Tokyo Amid Negative Sentiment on China Stocks


Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has been working as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a stock market trader and investor, she is keenly interested in economy, emerging markets and the intersections of finance and society. You can tweet to her @saxenavishakha

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