Goldman Sachs report: Hedge funds flock to the banking, insurance, and consumer finance sectors
Goldman Sachs report shows that hedge funds rushed into banks, insurance, and consumer finance companies at the fastest pace in three months last week, due to increased trading activity and relaxed regulatory policies. The European bank index rose by more than 40%, while the U.S. bank index increased by slightly over 20%. Hedge funds raised their overall leverage to an eight-month high, primarily investing in North American and European markets. The Federal Reserve cut interest rates for the first time last week and is expected to cut rates further
According to the Zhitong Finance APP, Goldman Sachs stated in a research report that hedge funds rushed into banks, insurance, and consumer finance companies at the fastest pace in three months last week, due to increased trading activity that is expected to boost profits, and regulatory policies are likely to be further relaxed.
So far this year, the European bank index has risen by more than 40%, while the U.S. bank index has increased by slightly more than 20%.
Goldman Sachs' report shows that these funds did not choose popular regional investment targets but instead allocated most of their capital to the North American and European markets, betting that stocks in these markets will rise.
The report from Goldman Sachs states that hedge funds, which had been reducing trading volumes since August, raised their overall leverage to the highest level in eight months last week.
Overall leverage is an indicator of hedge fund trading volume.
According to monitoring by Goldman Sachs' institutional brokerage division, financial companies are the second-largest buying sector, followed by the technology sector.
Analysts at the British investment bank Panmure Liberum stated, "At the beginning of the year, we were hopeful that the pragmatic attitude of regulators and the government would bring a better year for specialized lending institutions, both in terms of operations and stock prices. So far, everything is progressing smoothly."
The report notes that banks typically find it easier to make money during periods of higher interest rates, but the outlook for lower rates has already been reflected in stock prices.
The Federal Reserve lowered interest rates last week, marking the first rate cut since December of last year. Given signs of weakness in the U.S. labor market, the Fed hinted at further rate cuts in the meetings in October and December.
Goldman Sachs Group CEO David Solomon stated earlier this month that the bank expects to see the busiest IPO week since July 2021
