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17 August 2023, 04:46 PM IST
Livemint
- A Goldman Sachs report on Tuesday showed that all types of stocks were sold, but A-shares listed on the domestic stock market led the sell-off, accounting for 60 percent.
Amid a weak economic recovery in China, global hedge funds have been aggressively selling Chinese stocks amid heightened concerns over the country’s property sector. That led to an overall sell-off in China’s stock market, with Hong Kong’s Hang Seng index falling more than 3 percent, dragged down by basic goods and consumer cyclical stocks. The yuan fell to a 16-year low as weak market sentiment weighed on the currency index.
Amid a weak economic recovery in China, global hedge funds have been aggressively selling Chinese stocks amid heightened concerns over the country’s property sector. That led to an overall sell-off in China’s stock market, with Hong Kong’s Hang Seng index falling more than 3 percent, dragged down by basic goods and consumer cyclical stocks. The yuan fell to a 16-year low as weak market sentiment weighed on the currency index.
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Earlier this week, a Goldman Sachs report showed that all types of shares were sold, but A-shares listed on the domestic stock market led the sell-off, accounting for 60 percent. „Hedge funds have net sold Chinese stocks in eight of the last ten sessions in the prime book through 8/14,” the bank said, adding that its clients were exiting their long and short positions.
It was the biggest net sell in Chinese stocks in the 10-day period since October 2022 and one of the biggest moves in the past five years. Goldman Sachs, one of the largest providers of credit and trading services to investors through its prime brokerage division, can monitor the investment trends of hedge funds, according to a Reuters report.
Global investors have raised concerns about China’s economy as a confluence of recent events darken China’s economic outlook. To better understand China market sales, here is a glossary of terms one should know around Chinese markets:
Beijing Stock Exchange: The stock exchange was established in September 2021 in Beijing, China. It is one of the three major stock exchanges operating in mainland China.
PBOC: The People’s Bank of China (PBOC) is China’s central bank and is responsible for China’s monetary policy.
OEM: An original equipment manufacturer (OEM) refers to a company that manufactures a product based on its customer’s design and request, which is ultimately branded by its customer.
A-Share: A-share refers to equity shares of Chinese companies that are denominated in Renminbi (RMB) and traded on stock exchanges in mainland China.
Red Chip: Red chip refers to shares of China-based companies incorporated outside mainland China and listed on the Hong Kong Stock Exchange. Usually, majority shares of companies are directly or indirectly controlled by mainland China.
Foreign Investment Entities (FIEs): Foreign-invested enterprises are commercial enterprises registered in mainland China that are wholly or partially owned by foreign shareholders.
Shanghai Stock Exchange (SSE): The Shanghai Stock Exchange or SSE is a stock exchange based in Shanghai, China, and is one of the three major stock exchanges operating in mainland China.
Negative list: The negative list refers to the negative list for foreign direct investment (FDI) in China, a special administrative measure for access to foreign investments.
It is published and updated by the National Development and Reform Commission of the People’s Republic of China and the Ministry of Commerce of the People’s Republic of China (MOFCOM), which provides a comprehensive list of foreign-owned or prohibited industries in mainland China.
CAS: Chinese Accounting Standards for Business Enterprises (CAS), also known as Chinese Generally Accepted Accounting Principles (Chinese GAAP), are the accounting rules used in mainland China. Generally, they are consistent with International Financial Reporting Standards (IFRS) with some differences.
Updated: 17 Aug 2023, 04:46 PM IST
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