Hedge funds have lowest exposure to financials since March 2020 -Goldman

By Nell Mackenzie

LONDON (Reuters) – Global hedge funds sold financial stocks for a 10th week running in the week ending Dec. 8 and now have the lowest exposure to the sector since March 2020, when the COVID-19 crisis roiled markets, a Goldman Sachs note said.

Speculators ditched long positions on insurance stocks while switching out of buy positions and adding short bets on financial services and banks, the note dated Dec. 8 said.

A long position anticipates a stock price increase whereas a short bet anticipates a fall.

Banks including Goldman Sachs and Morgan Stanley initiated 3,000 job cuts at the start of 2023.

In Europe, Barclays is considering cutting up to 2,000 back-office jobs in addition to layoffs across its UK retail, corporate and investment bank, a source with direct knowledge of the proposals told Reuters last month, while rival Lloyds (LON:) has put 2,500 jobs at risk.

A dearth of deal making combined with economic uncertainty would shrink bonus pools and result in further job cuts next year, executives, consultants and headhunters have told Reuters.

Elsewhere, hedge funds working with Goldman Sachs’ prime brokerage turned long. Net buying in macroeconomic products reached the highest in nearly five months, the bank said.

America was the most net bought region, while developed markets in Asia was the most net sold.

Technology, financials and staples were the most net sold global sectors, the Goldman note said.

Consumer discretionary, commercial services and real estate were the most globally net bought, it added.

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