By Nell Mackenzie
LONDON, Feb 16 (Reuters) – Global hedge funds bought a record amount of stock from developed and emerging markets in Asia in the week to Friday 13, according to a Goldman Sachs client note seen by Reuters on Monday.
The trades wagered stock prices would rise, particularly in emerging markets in Asia, the Goldman data showed.
World indices fell sharply on Friday as investors intensified their selloff of tech shares in response to concerns about massive investment in artificial intelligence and its disruptive impact.
Yet over the week, several stock markets in Asia, posted positive weekly returns. Japan’s Nikkei and Taiwan’s stock indices both gained around 5% while the Korean Kospi added over 8% during last week’s trading.
HEDGE FUNDS FOCUS BULLISH TRADES ON ASIA
Hedge funds focused their bullish trades on Korea, Taiwan, and China, but Goldman Sachs did not offer any explanation for the preference.
There was “modest selling” in India, the bank said in the note circulated to clients on Friday.
It said hedge funds bought stocks in developed and emerging markets across Asia, in most sectors, including real estate, tech companies, industrials and consumer discretionary shares, but not in financials.
Exposure to Asian stocks was at the highest level since at least 2016, the note said.
Across the Pacific, after four consecutive weeks of net selling, hedge funds had slightly more buyers than sellers of U.S. equities, said a separate note by Goldman Sachs.
Technology stocks registered the largest net buying since December 2021 but still have more sellers than buyers, Goldman said.
U.S. consumer discretionary stocks – companies that offer products and services that people might want, but do not necessarily need – were the most net sold. Hedge funds also staged their largest move out of the sector in more than five years, said the second note.
Gross leverage levels, an indicator of how much risk hedge funds have in play, rose to a five-year high of 307% from last week’s 301.2%, Goldman said.
(Reporting by Nell Mackenzie; Editing by Amanda Cooper and Barbara Lewis)
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