ABC(Anything But China) To ABC(Allin Buy China)?

Go­l­d­m­an Sa­c­hs Tr­a­d­i­ng de­sk: Lo­ng Ch­i­na is the mo­st cr­o­w­d­ed tr­a­de on Wa­ll St­r­e­et ri­g­ht now.

Asian markets experienced a significant surge on Thursday, driven by reports that China intends to invest heavily in rebuilding the capital reserves of its state-run banks.

The Hong Kong Hang Seng index soared 4.16% to 19,924.58, while the Shanghai Composite saw a 3.61% increase, reaching 3,000.95.

In Tokyo, the Nikkei climbed 2.8% to 38,925.63.

South Korea's Kospi rose by 2.9% to 2,671.57, fueled by SK Hynix's announcement of a new AI-focused memory chip, resulting in a 9.4% hike in its share price.

Meanwhile, Australia's S&P/ASX 200 gained 1%, closing at 8,203.70.

As China's stock market rebounded strongly, hedge funds snapped up Chinese stocks, betting that the latest policy package will boost economic growth.

According to Goldman Sachs' institutional brokerage report, Chinese stocks recorded the largest single-day net buying since March 2021 on Tuesday, and the second largest buying in the past decade.

Some institutions believe that this rebound in the Chinese stock market was driven by short covering. But the above report shows that the buying was almost entirely driven by investors who increased their long positions. Hedge funds bought all types of Chinese stocks, mainly A shares, followed by H shares.

Funds flowing into the Chinese stock market through options have also increased. Goldman Sachs data shows that the open interest of iShares China Large Cap ETF (FXI) call options has increased to the highest level in a decade, with an increase of about 580,000 contracts.

According to Goldman Sachs, the total and net allocations of hedge funds to Chinese stocks are still at their lowest level in five years.