Hedge Flow: Asia equities exhibit record bullish momentum, Goldman Sachs says

Hong Kong and China Gas

25/02/2025 06:56

By Summer Zhen
       HONG KONG, Feb 25 (Reuters) - Hedge funds' willingness
to boost bets on Asian stocks last week rose to its highest
level on Goldman Sachs record since 2016, the bank said in a
note. 
    Long positions exceeded short positions by a ratio of 1.5 to
1, with China and Hong Kong accounting for nearly half of the
regional inflows from February 14 to 20, according to the note
this week.
    Japan contributed 23% of gross inflows, followed by Taiwan
and Australia. 
    "Asia is now the most overweight region versus MSCI AC World
weights," at the expense of hedge funds rotating out of North
America, the bank said, based on the hedge fund exposure it
tracks.  
    Hong Kong and China A-share markets have outperformed global
peers in the past month, as the emergence of DeepSeek fuelled a
tech rally and ignited animal spirits, driving Hang Seng Index
to a three-year high at 23688.45. Its sub-tech index has
advanced for six straight weeks. 
    Hot stocks such as Alibaba Group  9988.HK  surged over 60%
year-to-date. 
    The extreme bullishness has led to some concerns that there
is too much optimism over China's recovery and the U.S.-China
competition. 
    Both Hong Kong and China shares suffered sell-offs this week
after the Trump administration issued the "America First
Investment Policy", which aims to enhance restrictions on China.
    Kevin Liu, a strategist at CICC Research, suggested
investors take some profits around the 23,000-24,000 level for
the Hang Seng index, as sentiment and technical indicators look
overextended.

 (Reporting by Summer Zhen. Editing by Gerry Doyle)
 ((summer.zhen@thomsonreuters.com; 852-3462-7739;))