Hedge funds sold global equities in June at the fastest rate seen in two years, marking the third consecutive month of net selling, with the sell-off being primarily driven by short sales while long positions remained relatively stable, according to a report by Reuters.
The report cites data from the prime brokerage division at Goldman Sachs as revealing that single stocks experienced net selling for the second month in a row, with short sales surpassing long buys by a ratio of 4-to-1. The largest notional net selling was seen in the information technology, financials, real estate, and consumer staples sectors. In total, nine out of eleven global sectors experienced net selling in June.
Macro products though, including indices and exchange-traded funds (ETFs), saw marginal net buying, largely due to risk unwinds, where short covering slightly exceeded long sales. Notably, US-listed ETF shorts on Goldman’s prime book decreased by 6.8% in June, with significant short covering in small cap equity, financials, industrials, real estate, and healthcare ETFs.
Regionally, hedge funds sold developed market (DM) Asia stocks at the fastest pace since September, marking the first net selling in six months. All DM Asia markets saw net selling, led by Singapore, Australia, Hong Kong, and Japan. Both North America and Europe also experienced net selling in notional terms.
Emerging market (EM) Asia meanwhile, was the most net bought region in June, continuing a trend of net buying in six of the last seven months. Korea and Taiwan were the most net bought markets, offsetting net selling in China and Thailand. Chinese equities were net sold for the second consecutive month, with American Depositary Receipts (ADRs) and H-shares seeing more selling than the net buying in A-shares.
In terms of sectors, eight out of eleven were net sold in June, led by technology, media, and telecom (TMT), and consumer stocks.
