US hedge funds flock to Chinese stocks

US hedge funds have increased their investments in US-listed Chinese companies in the third quarter, with JD.com and GDS Holdings being the top choices, according to a Goldman Sachs note reviewed by Reuters.

Their exposure to Chinese stocks in the US market reached its peak since late 2021, as stated in the note to clients on Wednesday.

Approximately 25 per cent of US long-short equity funds had a long position in China ADRs (American Depository Receipts) at the start of the fourth quarter, according to the investment bank.

JD.com was the top choice, with 47 hedge funds increasing their ownership in the third quarter. GDS and Atour Lifestyle Holdings also saw increased interest, indicating optimism for consumption recovery and AI demand growth.

This renewed interest in Chinese stocks by Wall Street’s fast money coincides with the late September stock market rally in China. The rally was fuelled by a series of economic stimulus pledges announced by the Chinese government.

Billionaire David Tepper’s Appaloosa Management increased its investment in JD.com by 69 per cent and more than doubled its stake in PDD Holdings in the three months through September, as per separate 13-F regulatory filings.

Attribution: Reuters

Subediting: M. S. Salama