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Citi: Long-only Investors Slow Tech Buying, While Hedge Funds Increase Exposure

Citi strategists observed net selling from long-only managers over the past week, with buying primarily concentrated in consumer discretionary and industrials, while their buying in the technology sector slowed.


On the flip side, hedge funds increased their tech exposure the most in the past week, after weeks of selling, followed by consumer staples. At the same time, hedge funds sold off in health care, utilities, and real estate sectors.


The recent sector performance aligns with a shift from reflation trades toward stagflation and Goldilocks scenarios, where tech outperforms, Citi noted.


Over the last three months, sector-implied regimes have notably changed. In April, the “Overheat” theme, akin to the reflation trade, dominated the market as global PMIs hit their lowest point.

By late May and early June, equity sectors “showed a market with a lack of conviction through a regime investing lens,” strategists said.

“Ultimately, the market would make up its mind and a clear pattern has emerged: out with the reflation trade and in with a tech market torn between Goldilocks and stagflation,” they added.

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