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Long positions on Chinese equities have become the “most crowded trade” amongst fund managers, according to a Bank of America survey. Chris Flood reports on the survey’s findings in the Financial Times, writing:
Global fund managers are becoming increasingly nervous about the durability of the rally in Chinese equities, with one in five of the view that it has become the market’s “most crowded trade”.
Allocations by global fund managers to emerging market equities, including China, increased for a third straight month in February, according to a widely watched monthly Bank of America survey, which canvassed the views of 262 participants who oversee combined assets of $763bn.
Chinese blue-chip stocks in Shanghai have risen 14 per cent since the start of November as investors warmed to Chinese president Xi Jinping’s decision to drop the country’s economically disruptive zero-Covid policy.
But fund managers have become concerned about the rapid increase in the popularity of Chinese stocks, a potential warning sign that momentum could flag.
It was the first time a “long China equities” position featured as the most crowded trade in the survey’s history, which dates back to 1985.
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