9/7/2021 Hedge Funds Are Reducing Holdings of American Companies That Rely on the CCP

Translated by MOS Finesse Team-Gloria

Edited by MOS- James Zoebel

The New York Stock Exchange (NYSE)

According to the data compiled by Goldman Sachs, hedge funds are reducing their holdings of American companies that rely heavily on China for their businesses. In August, fund managers have slashed 26% of shares of companies that relied on the Chinese market and increased sales there, a drop indicating the lowest level since April 2020. Meanwhile, hedge funds also dumped 17% of the shares of companies that depend on raw materials or products from China, approaching the lowest point in 2020.  

Typically, the buying and selling behaviors by hedge funds indicate stock market changes. Their latest movement reflects a shift in the position of the United States towards US companies that are close to Communist China, particularly after China stocks plummeted.   

In the wake of increased understandings of the CCP’s economy and its nature, American investors will no longer make favorable investment decisions based on glamorous Chinese data. Hedge fund managers are concerned with a number of factors, including the inconclusiveness of the investigation on the origin of Covid-19, the closure of the Chinese ports, and CCP’s suppression on private enterprises as well as its attempt to fully control the technology giants.  These incidents have caused US hedge fund managers to worry about the future of the Chinese economy. They are no longer willing to trust CCP’s openness towards foreign companies and investors.

To regain the favor of hedge funds, American companies suffering from reduced holdings are likely to detach themselves from the CCP thoroughly, which, in turn, will also trigger a new wave of decoupling.

References:

https://www.bloomberg.com/news/articles/2021-09-04/hedge-funds-slash-exposure-to-u-s-stocks-that-count-on-china

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