Street Calls of the Week
UBS released a report highlighting trends in international investor behavior for the fourth quarter of 2024. The analysis, which tracked approximately 800 active foreign institutional funds, indicated a slight increase in their underweight positions in China, from -1.7% in the third quarter to -1.9% in the fourth quarter of 2024.
The top 40 global investors, encompassing both passive and active holdings, reduced their equity holdings in China by 40 basis points compared to the third quarter of 2024. In contrast, sectors such as banks, consumer goods, and technology experienced the most significant inflows during the same period. Property and healthcare stocks, on the other hand, saw the largest outflows.
The report also observed a notable acceleration of southbound inflows into the Hong Kong market, totaling approximately $40 billion, with financials, internet, and tech sectors, particularly Alibaba (NYSE:BABA) and Xiaomi (OTC:XIACF), attracting the most investment. Conversely, northbound investors pulled back, with estimated outflows of $17 billion, primarily from materials, utilities, and food & beverage sectors.
Despite the overall reduction in Chinese equity holdings, around 20 funds that did not hold any Chinese stocks in the previous quarter added China back to their portfolios. These funds were primarily global mandated funds based in Europe and the United States.
As of the end of the fourth quarter of 2024, approximately 190 funds, with combined assets under management (AUM) of $188 billion, did not have any Chinese equities, a slight decrease from around 200 funds in the third quarter.
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