SocGen Strategists Say Hedge Funds Are Too Pessimistic on Stocks
- Net short positioning on S&P 500 futures falls near GFC-levels
- Stock drop ‘would almost come as a relief’: SocGen strategist
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Hedge funds positioned for a sharp slump in global equities have become too pessimistic and might have to turn bullish if stocks keep rallying, in turn sending the market even higher, Societe Generale SA strategists say.
Positioning is “so extreme” that no decline in equities “could result in a quick and drastic reversal of positions,” strategist Arthur van Slooten wrote in a note. “Potentially, that would even contribute to a market reaction in the opposite direction, sending equities and bond yields higher.”