This $100 Million Hedge Fund Just Shorted China Stock Futures

(Bloomberg) -- A $100 million hedge fund is betting that the outcome of U.S.-China trade talks won’t be positive enough to lift stocks on Monday.

"We shorted Chinese stock futures today," said Jae Lee, chief executive officer at Timefolio Asset Management SG Pvt, a hedge fund with a China equity long-short strategy. "Honestly, I don’t think there will be any positive news at all” in the talks Friday during the U.S. day, he said in a telephone interview from Singapore. “If you want to see stocks rise on Monday, there needs to be news like cancellation of the tariffs."

Lee, who declined to comment on returns of the fund as it was just launched in March, said the “National team” --- a group of state-related bodies that Chinese authorities lean on to buy stocks during times of turbulence --- won’t be able to support markets again on Monday. The Shanghai Composite Index rebounded starting at 1:05 p.m. local time, as Beijing took steps to stabilize the market after the U.S. imposed additional tariffs on the nation’s goods.

While he sees a short-term correction for Chinese equities, Lee said the longer-term outlook could be positive given China’s stimulus measures for industries like automobiles and the property market. He added that U.S. President Donald Trump may want negotiations with China again if the S&P 500 index falls more than 5%.

"It was indeed a memorable week,” he said. “Still, we see speculation rising that Trump may announce additional tariffs in the coming weeks too.”

To contact the reporter on this story: Heejin Kim in Seoul at hkim579@bloomberg.net

To contact the editors responsible for this story: Divya Balji at dbalji1@bloomberg.net, Joanna Ossinger, Will Davies

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