Goldman Sachs exposes "Smart Money" shift: Hedge funds selling North American stocks, buying Chinese stocks

According to data from Goldman Sachs, recently, "smart money" has been fleeing from the US stock market and flowing into stock markets in emerging markets in Asia such as China.

Based on the Goldman Sachs prime brokerage data as of this past Friday, August 2nd, hedge funds have been selling global stocks for the third consecutive week. Among them, the selling volume of North American stocks by these funds exceeded the buying volume of stocks in other regions.

By region, Goldman Sachs data shows that hedge funds have been net buyers of stocks in Asian emerging markets by the largest margin. As of this past Friday, hedge funds achieved net buying of Chinese stocks for the first time in three weeks, marking the largest net buying volume in two months.

By product, Goldman Sachs data shows that hedge funds have been net sellers of macro products such as indices and ETFs for the second consecutive week, mainly through short selling, with very little net capital activity in individual stocks.

By industry, Goldman Sachs data shows that in the 11 global sectors, seven sectors saw risk investment unwinding. Hedge funds have been selling individual stocks in the global healthcare sector at the fastest pace since August 2023, mainly through long selling.

Meanwhile, non-essential consumer goods have been the sector with the most net buying by hedge fund capital, with fund investments in this sector showing net buying for four out of the last five weeks.

At the sub-industry level, hotels, restaurants and leisure, general retail, textiles, clothing, and luxury goods are the industries with the most net buying. Among the industries being sold off, hedge funds continue to withdraw capital from essential consumer goods, with seven out of the last eight weeks showing net selling in this sector.

Last week, Wall Street News mentioned that the US stock market is experiencing a "historic big switch", with investors reallocating funds from the technology sector to other previously lagging sectors. However, essential consumer goods have failed to catch the tailwind of the US stock market rotation.

Why are consumer stocks "not moving up"? From the perspective of financial performance, financial reports of companies in the US essential consumer goods industry show uneven pricing power, especially as low-income American consumers have become exhausted by high prices, to some extent weakening the sector's traditional defensive position in investment portfolios