Goldman’s China Hedge Fund Clients End Another Week With Losses
(Bloomberg) -- Goldman Sachs Group Inc.’s hedge fund clients focused on Chinese stocks once again saw steep losses as concerns about the nation’s increased oversight of tech and other fast-growing businesses sparked a broad sell off.
China fundamental long-short hedge fund clients lost an estimated 3.2% on average last week, taking August’s decline to 3.9% after a period of relative calm earlier in the month, the Wall Street bank wrote in a note to clients on Tuesday.
While technology stocks rallied in recent days, the losses come on top of last month’s meltdown that caught Asia-based hedge fund managers flat-footed. China said it is studying proposals to protect the rights of drivers for online ride-hailing and trucking platforms as well as for regulation of the live-streaming industry, sending the benchmark MSCI China Index down 7.7% last week.
The jitters extended to emerging Asia stocks, where weekly net selling was the highest since Goldman Sachs began to track such data, according to the note from the bank’s prime brokerage team.
A Hong Kong-based spokeswoman for Goldman Sachs declined to comment.
Tighter scrutiny in the world’s second-biggest economy on industries including private after-school tutoring, online gaming, food delivery and e-commerce giants has been damping investor confidence in the nation’s stocks.
Goldman Sachs’ clients focused on fundamental stock picking for China had their second-worst month on record in July, losing an estimated 5.6% on average. After the first 20 days of August, such funds were 5.1% in the red this year. The MSCI China Index, in which tech companies are the largest constituents, has slumped 28% from a mid-February high.
Still, China tech stocks have rebounded this week as Tencent Holdings Ltd.’s share buyback and strong results from JD.com buoyed sentiment. Asset managers including Cathie Wood’s Ark Investment Management have joined the bargain hunters. The Hang Seng Tech Index has surged nearly 10% this week.
Goldman Sachs and Morgan Stanley are the largest prime brokers in Asia, lending cash and securities to hedge funds and helping them settle trades.
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