Hedge Funds Cut China Stocks for Fourth Week as DeepSeek Optimism Fades
Global hedge funds have continued to sell China equities for a fourth straight week as renewed enthusiasm for Chinese tech stocks ignited by low-cost artificial intelligence startup DeepSeek began to fade. Hedge funds have reversed course since mid-February, cutting long positions and adding short bets, according to Goldman Sachs prime brokerage. The investment bank estimates that hedge fund positions on China remain relatively light, with net allocation ranking in the 37th percentile over the past five years.
- As the bloom of DeepSeek's enthusiasm begins to wilt, investors may be forced to reassess their risk appetite and consider alternative strategies for navigating China's complex economic landscape.
- Will the deceleration in China's trade growth and worsening deflationary pressures translate into a more significant sell-off across Chinese equities, or can other factors mitigate this trend?