Daily Management Review

Soon, Hedge Firms Plan To Sell Up To $30 Billion Worth Of Stocks Using Computers – Says UBS


Given the receding stock markets, hedge funds that trade stocks on computers anticipate starting to sell in the next two weeks to the tune of $20 billion to $30 billion, according to a UBS memo obtained by the media.
According to the UBS note, hedge funds that use computers to track market patterns have changed their bullish stance on stocks to neutral.
The bank predicts that up to $30 billion in withdrawals will soon affect the markets, perhaps accelerating the share price decline as these hedge funds begin to sell stock in response to the recent poor performance.
Since November 2022, these hedge funds won't be net short equity markets until this time, according to the bank.
U.S. stocks experienced their first quarterly decline in 2023, a 3.6% decline from July to September, as investors struggled with the possibility of interest rates staying higher for longer and surging oil prices exacerbated inflation concerns.
In contrast to stock-picking hedge funds, commodities trend advisers (CTAs) track the movement of an equity rather than determining whether or not its stock price is appropriate.
Their trades frequently follow market movements later since it takes time for a downward trend to develop.
The Securities Industry and Financial Markets Association estimates that the U.S. stock market is worth $46.2 trillion.
CTAs are short long-term US Treasury bonds while long the currency.
Through the month of September, these hedge funds continued to acquire dollars, according to UBS, which put the total amount of buying at $60 to $70 billion.
According to the Bank for International Settlements, currency trading reached a record $7.5 trillion per day in September 2022, with dollar pairings accounting for 88% of total transactions.