Hedge funds have taken massive short positions on American equities. This "smart money," as it is often called, is increasingly betting that Artificial Intelligence and the disruption it causes to existing business models will continue to create market turbulence. According to Bloomberg, Goldman Sachs reports that hedge funds bolstered their record short positions in US stocks last week, with the technology sector being hit the hardest. Bank data stretching back to 2016 reveals that the volume of notional short selling at the individual stock level reached a historic high last week. From January 30 to February 5, short sales were double the long purchases. Hedge funds remained net sellers of US equities for the fourth consecutive week, with the intensity of selling being the strongest since last April's "Freedom Day."
AI concerns lead to panic
Anxiety over how Artificial Intelligence will reshape the American economy manifested sharply on Wall Street, leading to a tumultuous week for the markets. The catalyst for the decline was a series of new tools released by Anthropic designed to automate tasks across multiple industries. The total market capitalization of 164 stocks in the software, financial services, and wealth management sectors evaporated by $611 billion last week.
Technology in the eye of the storm
The technology sector suffered the heaviest selling, recording the second-largest net capital outflow of the last five years. The software sector led this retreat, accounting for approximately 75% of the industry's net sales. The total net exposure of hedge funds to software stocks dropped to 2.6%, while the long-short ratio fell to 1.3, both reaching historic lows. Simultaneously, stocks in semiconductors, semiconductor equipment, and IT services were among the few tech sectors recording net purchases, with the semiconductor index rising and widening the gap with software stocks—a phenomenon observed in recent months as investors penalize sectors they fear will be disrupted by AI.
Shift to defensive sectors
Beyond technology, hedge funds continue to move toward defensive sectors. The healthcare sector was the most net-purchased last week and now leads in hedge fund inflows since the start of the year, overtaking the industrial sector. Despite a partial market recovery on Friday due to bargain hunting, the Nasdaq 100 recorded its worst week of the year.
www.bankingnews.gr
Σχόλια αναγνωστών