Original title: an investigation on the Ecology of investors after the collapse of Chinese stocks; Wall Street hedge funds have no choice but to leave the market. Chinese retail investors are keen to copy the bottom.

"before the US Securities Regulatory Commission resumes the registration of IPO, we can only maintain the proportion of investment in Chinese stocks at a very low level." On August 23, a Wall Street multi-strategy hedge fund manager spoke bluntly to reporters.

Since china tightened its antitrust regulation on the internet in April, his hedge fund has been reducing its holdings of US-listed Chinese stocks, which now account for less than 2 per cent of the portfolio, down from 7.5 per cent at the start of the year.

This is the epitome of many Wall Street hedge funds reducing their holdings of US-listed stocks.

The reason is that many hedge funds are afraid of SEC reiterating that "if Chinese stocks do not provide audit manuscripts and audit records in the next three years, they will not be listed in the United States", which may make many Chinese stocks eventually face the risk of delisting.

The above-mentioned multi-strategy hedge fund managers told reporters that although many hedge funds privately said bluntly that the share prices of many Chinese stocks were obviously undervalued, they were still unable to persuade the Fund Investment Committee to make a decisive bottom decision.

However, some people left the venue sadly, while others entered actively.

Since July, more than 12 billion yuan has flowed into ETF, which tracks the Hang Seng Technology Index, the Hang Seng Internet Technology Industry Index and the China Internet 50 Index.

Behind this, many Chinese retail investors actively take advantage of the channel to buy Chinese-listed stocks related to the ETF to copy the bottom of Chinese-listed stocks.

A person from a domestic Internet brokerage told reporters that compared with the worries of Wall Street hedge funds, Chinese retail investors do not seem to have such worries, and they are more optimistic that Chinese stocks will rebound in the event of a sharp fall.

Recently, JPMorgan Chase & CoGabriela Santos, a global market strategist at asset management, also reported that the MSCI China index has lost about 1% of its market value in the past six months, but it also indicates that the related stock index could rebound by 20% in the next six months.

The reporter learned that the current enthusiasm of Chinese retail investors for Chinese stocks is still continuing, even showing a trend of buying more and more.

The "helplessness" and "struggle" of Wall Street hedge funds

The substantial reduction of the holdings of Chinese stocks by Cathie Wood, a star fund manager on Wall Street, is undoubtedly a true portrayal of the current Wall Street investment institutions' love and fear of Chinese stocks.

The star fund manager, who made huge profits by plagiarizing the bottom of US-listed stocks last year, has continued to substantially reduce his holdings of US-listed stocks since the second quarter.

On July 27th, Ark Investment (ARK Invest), which it manages, released the latest position report, showing that its active investment fund sold and reduced its holdings of Pinduoduo.、 JD.com Inc, Meituan, KANZHUN LIMITED, BYD, Ping An Healthcare And Technology and other Chinese stocks, and the flagship fund ARKK, which has assets under management of US $22.4 billion, has cleared Tencent and KE Holdings Inc..As a result, the proportion of Chinese stocks allocated to China has plummeted to 0.32% from 8% at the beginning of the year.

Cathie Wood said bluntly that from a valuation point of view, the share prices of these Chinese stocks have fallen by a large margin, but are likely to continue to fall in the future.

"affected by this, many hedge funds have also begun to follow suit to reduce their holdings of US-listed stocks." The multi-strategy hedge fund manager said.

Reporters have learned that although most hedge funds said bluntly that the plunge in US-listed stocks was more driven by market pessimism and showed signs of excessive decline, they were unable to bottom out quickly.

"We have communicated many times with the members of the Fund Investment Committee, saying that the share prices of the leading Internet companies have experienced the sharp fall, and their share prices have fully reflected the policy regulatory uncertainty and market pessimism, and now it is a good opportunity to make a profit from the bottom. however, the members of the Investment Committee are unmoved and insist that the proportion of investment in Chinese stocks should still be maintained at a very low level." The head of the asset allocation department of a large Wall Street hedge fund told reporters. Behind this, the Fund Investment Committee is more willing to keep the investment profits since last year and is not willing to take risks.

As a result, the entire Asset allocation Department has also made some "flexibility" in investment strategies-previously, US-listed stocks were allocated as separate asset classes, but now they are scattered into various industry categories for investment. in this way, the trading team has the right to make moderate bottoming investments in Chinese stocks with low regulatory uncertainty in industries such as new energy vehicles, biomedicine and environmental energy.

"however, at present, our investment in US-listed stocks accounts for less than 1.5 per cent, far lower than the 5 per cent at the end of March." He said.

The reporter learned that many hedge funds have reduced their holdings of US-listed stocks, which also attracted some speculative capital to take advantage of the opportunity to sell short-listed Chinese stocks and arbitrage. For example, they bought an ETF that shorted the FTSE 50 index three times to gain higher short selling gains.

As of Aug. 22, the triple short FTSE China 50 index ETF had risen 20.96 per cent in the past week and about 33 per cent in a single month.

"however, this is more like short-term speculation." Said one US stock broker. Since the weekend, many speculative capital involved in shorting Chinese stocks have begun to leave the market at a profit, as they have found that as the market panic recedes and hedge funds reduce their holdings, continuing to short Chinese stocks will face the dilemma of high risk and low return.

Chinese retail investors copy the bottom crazily and never forget the "risk control".

Compared with the cautious attitude of Wall Street hedge funds, Chinese retail investors' enthusiasm for Chinese stocks is "one wave after another".

The reason is that China's Internet 50 index has fallen 32.21% since July, while China Internet ETF, which tracks the index, has fallen 26.51%, making many Chinese retail investors believe that "there will be a big rebound after a sharp fall."

The aforementioned Internet brokerage personage pointed out to the reporter that many retail investors believe that "with the introduction of strong regulatory policies, the worst days are over." He found that many Chinese retail investors are still "cautious" about the bottoming of Chinese stocks-for example, they will invest most of their bottoming funds in Chinese stocks with less policy uncertainty, such as new energy vehicles, biomedicine and environmental energy. on the other hand, the intensity of bottoming for Chinese-listed stocks of Internet leading companies is significantly lower. In addition, many retail investors will pay close attention to the latest investment recommendations of investment banks on Chinese stocks, and they are willing to make bottom investments only if they are listed as "overweight" rated by Wall Street investment banks.

"many Chinese retail investors also do the timing trade of selling high and absorbing low, selling at a high price whenever Chinese-listed stocks rebound, and then bottoming out when the stock price falls, so on and on." He revealed.

With the increasing number of Chinese retail investors buying bottom Chinese stocks, there is still a lot of controversy in the hedge fund industry whether they can become white knights to save the decline of Chinese stocks.

However, there is still a big uncertainty as to whether the bottom-buying tide of Chinese retail investors can make Chinese stocks recover their lost ground. At present, we find that many Wall Street investment institutions still take advantage of the opportunity of the rebound of US-listed stocks to reduce their holdings and leave the market. " The above-mentioned Internet brokerage personage said. This seems to be a sign that the competition between retail investors and institutions for pricing rights over US-listed stocks is quietly escalating.

"due to the previous decline in the share price of US-listed stocks and the policy rectification in some industries, Wall Street stockbrokers still impose strict restrictions on the proportion of margin financing for some US-listed stocks. Many US-listed stocks could have pledged financing at 50% of the market value of the stock, but now the proportion of pledged financing has dropped to 20%. As a result, many hedge funds are reluctant to hold US-listed stocks for leveraged investments-- whenever US-listed stocks rebound. They will reduce their holdings at every high and leave the market, making it difficult for everyone to gather firewood to achieve the high effect of fire. " The above-mentioned US stock brokers said bluntly.

(author: Chen Zhi, Editor: Lin Hong)