China’s Local Hedge Funds Rush Into Liquidity-Driven Stock Rally

China’s equity bull run is getting a boost from the country’s domestic hedge funds, fueling hope among local brokers that the liquidity-fueled rally has legs.

An index tracking the equities positions of Chinese hedge funds that manage over 10 billion yuan ($1.4 billion) rose more than 8 percentage points to 82% in the week ended Aug. 15, according to Bloomberg calculations of data from Shenzhen PaiPaiWang Investment & Management Co., a fund data provider. That’s the biggest weekly increase in about two years.