Morgan Stanley: Active Long-only Funds Sell Less Chinese Stocks in April; TENCENT, MEITUAN, BYD Positions Increased

Morgan Stanley's China Quantitative Strategy report revealed that despite the 6.6% rise in the MSCI China Index in April, active long-only funds were net sellers, shedding an additional US$2.3 billion worth of shares. However, the pace of cuts in Chinese stocks slowed, indicating a shift in fund manager behavior.

Foreign long-only funds were not the sole contributors to the recent strength in China and Hong Kong equities markets; hedge funds and quantitative funds also played significant roles as buyers, according to the broker's position and capital flow monitoring.

While active funds in global, emerging markets, and Asia ex-Japan sectors reduced their Chinese equities holdings, global equity funds increased their holdings in April. Notably, new energy vehicles and consumer services saw significant additions, while e-commerce and bank stocks faced selling pressure.

The report highlighted that foreign long-only funds largely retained their positions in Chinese stocks but reduced shares in other Asian markets due to investor redemptions. Comparing April's position changes with those of 1Q24, growth stocks like $TENCENT(00700.HK)$ , $MEITUAN-W(03690.HK)$ , and $BYD COMPANY(01211.HK)$ were favored, while reductions in $AIA(01299.HK)$ holdings appeared to have paused.