Amid growing concerns regarding China's property sector and a slew of lackluster economic data, the global hedge funds engaged in a robust wave of selling Chinese stocks, according to Reuters, citing a recent report by Goldman Sachs.
The “aggressive” selling impacted various categories of stocks during the initial days of August. Notably, A-shares, which represent stocks listed on the domestic market, were the dominant theme in this sell-off, constituting a significant 60% of the total decline.
"Hedge funds have net sold Chinese stocks in eight of the last 10 sessions on the prime book through 8/14," Goldman Sachs reportedly said in a note.
According to the investment giant, this marks the most substantial continued selling of Chinese stocks in any 10-day stretch since October 2022 and ranks among the sharpest downward shifts observed in the last five years.
The New York-listed KraneShares CSI China Internet ETF (NYSE:KWEB) is down 12% in August, marking the largest monthly fall since February.
The selloff comes amid growing concerns about China’s economy with several bank economists, including those at UBS and Nomura, predicting that the country’s economy may grow less than 5% this year.
“Prolonged weakness in property construction will add to destocking pressures in the industrial space and depress consumption demand as well,” economists at UBS, said.
“In such a case, economic momentum may stay subdued in the rest of the year and China may miss this year’s growth target of around 5%,” they added. “Deflation pressures could persist longer in such a scenario. The economy would then warrant much stronger or unconventional policies to revive.”