- In the last three months, U.S. stocks with the highest reported sales exposure to China outperformed the S&P 500 index by 7 percentage points, according to the report.
- Stocks have soared to new highs multiple times since the U.S. and China began working on a phase-one trade deal in October.
- Read more on Business Insider .
Hedge funds are loading up on China-exposed stocks — and it shows just how optimistic they are that a trade deal is coming
Hedge funds increased holdings in China-exposed stocks in the third quarter amid boosted trade-deal optimism, according to a Monday report from Goldman Sachs.
Hedge funds are preparing to profit if the U.S. and China reach a deal on trade, according to a Monday report from Goldman Sachs.
At the beginning of the fourth quarter, the median China-exposed stock had 3.4% of market capitalization owned by hedge funds, up from 2.7% at the start of the third quarter, according to the report that analyzed the holdings of 833 hedge funds with $2.1 trillion of gross equity positions.
The bet on China has paid off since trade tensions eased in mid-August, Goldman said. U.S. stocks with the highest reported sales exposure to China have returned 17% in the past three months, according to the report.
Those returns are 7 percentage points higher than the S&P 500, which has returned 10% in the same time period, Goldman said.
Since the U.S. and China announced a phase-one trade deal in October, stocks have soared and even hit fresh highs multiple times , boosted by positive news on trade and strong earnings reports.
Still, weeks later, uncertainty around the potential agreement remains. Trump is reportedly not ready to sign a deal yet , as the details are still being worked out.
One of the most important details is around ending tariffs China wants all tariffs to be lifted before signing a final deal, but Trump hasn't agreed to remove them, Commerce Secretary Wilbur Ross said in an interview with Fox Business Network on Friday .
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