Global hedge funds have increased their holdings of Chinese equities for the fourth consecutive week, anticipating a market rebound driven by Beijing’s economic measures and positive macroeconomic data. Since February, Chinese stocks have rallied, with the Hang Seng Index rising by a third from its January low and the MSCI China index up 16% year-to-date. Hedge funds have actively purchased Chinese stocks in seven of the past eight weeks, according to a Goldman Sachs report. Additionally, Goldman Sachs raised price targets for the MSCI China and CSI 300 indexes, reflecting increased investor confidence.
Despite the positive momentum, not all investors are convinced of a sustained recovery. Indus Capital, a New York-based hedge fund, remains underweight on China, citing ongoing economic challenges and deflation pressures. Nonetheless, recent measures by China to bolster market confidence, including a 1 trillion yuan stimulus bond issue and housing market support, have fueled optimism. Some hedge funds are capitalizing on the rally by buying call options to maximize potential gains, further contributing to the market’s upward trajectory.