On Tuesday this week, as the Chinese stock market rebounded strongly, hedge funds aggressively bought Chinese stocks, betting that the latest policy combination will drive economic growth.
According to a report from Goldman Sachs' brokerage business, Tuesday saw the largest single-day net buying volume in the Chinese stock market since March 2021, and the second largest buying volume in the past decade.
Regarding this rebound in the Chinese stock market, some institutions believe it is driven by short covering. However, the above report shows that the buying was almost entirely driven by investors increasing long positions, with hedge funds buying all types of Chinese stocks, primarily A-shares followed by H-shares.
Funds flowing into the Chinese stock market through options have also increased. Goldman Sachs' data shows that the outstanding contracts of bullish options on iShares China Large-Cap ETF (FXI) have reached the highest level in a decade, with an increase of approximately 580,000 contracts.
According to Goldman Sachs, the total allocation and net allocation of hedge funds to Chinese stocks are still at the lowest level in five years.
On Wednesday, the momentum of the rebound weakened, with some investors doubting its sustainability, but Goldman Sachs' trading department remains optimistic.
Wall Street News previously mentioned in an article that Goldman Sachs' trading department observed explosive growth in trading volumes for A-shares and H-shares, with long-only strategies also buying in, and the derivatives market trading very actively. Goldman Sachs' conclusion is: the upward momentum can continue.

According to a report from Goldman Sachs' brokerage business, the buying pressure is mainly driven by investors increasing long positions. Hedge funds have purchased all types of Chinese stocks, with a focus on A-shares followed by H-shares

- This week, Chinese stock markets saw a strong rebound as hedge funds aggressively purchased Chinese stocks, betting on new policy measures to boost economic growth.  
- According to a Goldman Sachs report, the market recorded its largest single-day net buying volume since March 2021, driven mainly by investors increasing long positions rather than short covering.  
- Despite some skepticism about the sustainability of the rebound, Goldman Sachs remains optimistic, noting significant increases in trading volumes and long-only strategies in both A-shares and H-shares.

Goldman Sachs: Hedge funds' net buying volume in the Chinese stock market on Tuesday was the "second highest in the past decade"