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Hedge funds that recently shifted their focus to Chinese Stocks in anticipation of stimulus measures are now reversing course. Professional traders recorded significant net selling of Chinese securities on Tuesday, marking the largest single-day sell-off according to Goldman Sachs’ prime brokerage data. This sudden exodus came after the National Development and Reform Commission provided limited details on additional stimulus plans for the world’s second-largest economy. Despite local officials mentioning an accelerated issuance of special purpose bonds to support economic growth, no major spending initiatives were announced. As a result, hedge funds quickly liquidated their Chinese equities, with long sells outnumbering short sells. Just a week earlier, hedge funds had been increasing their exposure to the Chinese market following a surge of optimism from Beijing’s stimulus efforts. The volatility in Mainland China’s CSI 300 stock market index this week has been attributed to the disappointing news from officials. After initially soaring over 10%, the index later dropped to a 6% gain and then experienced a sell-off resulting in a 0.5% decrease week to date. Investors are now eagerly awaiting further clarity on the government’s economic boost plans from the Chinese finance minister’s upcoming press briefing on Saturday.
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Emily Jensen, graduated from the London School of Economics and Political Science (LSE) in the UK in 2015 with a degree in Economics. She specializes in financial markets and international trade. After graduating, she worked as an analyst at an investment bank in London, where she developed expertise in global economic trends. She later transitioned into consulting, focusing on fintech ventures and providing insights into global economic developments. Emily is passionate about the intersection of finance and technology and aims to drive innovation in the financial sector.
