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Written by Summer Jen
HONG KONG (Reuters) – The world’s long-only funds will grow in December in 2023 as they rush to meet redemption demands and diversify from the world’s second-largest economy, Morgan Stanley analysts said. Chinese stocks were sold at the fastest pace.
Morgan Stanley’s quantitative research team reported net outflows of $3.8 billion from active long-only managers in Chinese and Hong Kong stocks combined last month, making it the worst month of 2023 and the third-largest on record. This is a monthly outflow, Morgan Stanley’s quantitative research team said in a report released to clients. Tuesday.
“Both investors’ redemptions from equity funds and portfolio managers’ rebalancing to deepen their underweight to China contributed to outflows,” said analysts led by Gilbert Wong.
Chinese and Hong Kong stocks ended 2023 with the worst performance among the world’s major indexes, dragged down by geopolitical risks, a slow economic recovery, and policy uncertainty.
China’s benchmark blue-chip CSI300 index fell 11% in 2023, while Hong Kong’s Hang Seng Index fell 14%.
The Chinese government has launched a number of measures in recent months aimed at boosting the economy, but analysts say these measures are not enough to restore market confidence.
Morgan Stanley said European fund managers are “catching up to match their underweight to China” with their U.S. counterparts.
The investment bank said that of the $3.8 billion in outflows in December, $2 billion was due to investors redeeming funds and the rest was due to fund managers rebalancing abroad.
In 2023, Tencent Holdings, Alibaba Group Holdings, Guizhou Moutai and NetEase topped the weighted list, while Jingdong, Yum China Holdings and AIA were the most sold, according to Morgan Stanley.
Funds that are long-short stocks appear to see higher value in Chinese stocks in December, as opposed to funds that are only long.
UBS’s prime brokerage team said hedge funds bought Chinese stocks well in the final weeks of 2023, as hedge funds aggressively bought on the edge, betting on a stimulus surprise. Ta.
(Reporting by Summer Jenn; Editing by Jamie Freed)
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