Goldman Sachs Report: Hedge Funds are frantically buying global industrial stocks, with net purchases reaching a five-year high.

Goldman Sachs Group, Inc.'s latest data shows that hedge funds sparked the largest net buying spree in the global industrial stocks sector in five years last week, with the net inflow reaching a new high since July 2020 and ranking second highest since 2016. The industrial sector became the most significant sector for global fund net inflows this week, mainly due to active long positions and short positions being covered. From a regional perspective, industrial stocks in regions other than developed markets in Asia showed a trend of net buying. In North America, buying was most active, driven by increased long positions and short covering; while in Europe, short covering was the dominant force. Valuation advantages, improved corporate earnings, and loose policies have collectively boosted market sentiment. Goldman Sachs Group, Inc. points out that the allocation of industrial stocks tracked by its Prime platform is 5.8 percentage points higher than the MSCI Global Index (URTH), which has been hovering at historically high levels in the 99th percentile for five consecutive years. It is worth noting that the global long/short ratio for industrial stocks has reached 2.25, a new high since August 2022, placing it in the 58th percentile range over the past five years. Earnings expectations for European companies have significantly improved, with projected earnings growth of 7.9% in 2025, a significant increase compared to the growth rates in 2024 and 2023, supported by loose policies and expected interest rate cuts that are driving the stock market higher. In the North American market, the S&P 500 index hit a new historical high amid volatility, with the ongoing AI frenzy driving tech giants' stock prices significantly higher, subsequently boosting overall market performance. The global energy transition and supply chain reshuffling have sparked trillion-dollar infrastructure demand, with data centers, charging networks, and hydrogen facilities becoming the focus of public and private capital competition, providing vast development opportunities for related sectors within industrial stocks. Goldman Sachs Group, Inc. advises investors to focus on ETFs in sectors such as industrial and energy, such as iShares Global Industrials ETF (EXI.US). In terms of investment strategy, Goldman Sachs Group, Inc. suggests investors shift their focus towards "Alpha" in 2025, aiming for stock performance that surpasses the market average, rather than relying on overall market "Beta" performance.