Samira Farzad

Hedge funds sold European shares in March and April, marking the highest volume in a decade. This sell-off was driven by the concerns around trade tariffs proposed by Donald Trump and the strength of the euro, which eroded the competitiveness of the bloc’s export sector. In a global environment characterised by high volatility, hedge funds have not only reduced their long positions but also increased their bearish bets on European markets. However, hedge funds remained net long on German companies.

Following the temporary suspension of tariffs on April 9, some funds unwound their defensive positions, which had been set up to profit from falling indices. Additionally, they reallocated resources toward banks and financial services companies, while simultaneously increasing their exposure to defense industry firms. The latter could continue to see interest from hedge funds as defense spending in Europe is expected to grow.

Farzad, Head of Business Development at HF Quarters