Hedge funds significantly reduced their holdings of European stocks in June, reversing the buying trend from the previous month, according to a report by Bloomberg citing data from Goldman Sachs Group Inc’s prime brokerage division.
According to Goldman, the sell-off was driven by an equal mix of unwinding long positions and adding short positions, prompted by the financial market’s reaction to the call for a snap election in France.
Goldman Sachs’ data revealed that Europe saw the largest reduction in overweight positions compared to other global regions. The financial sector, especially banks, experienced the most significant cut in exposure, with net selling reaching levels not seen since November 2021.
Last month, a rally in European stocks came to a halt, with French stocks recording their most biggest monthly decline in two years due to the country’s political uncertainty.
