Bridgewater Trims Gold Overweight, Stays Cautiously Optimistic on China Stocks

Bridgewater Associates has reduced its overweight gold position in its China business, citing rising interest rates that raise the opportunity cost of holding bullion and higher oil prices curbing demand from energy importers such as India, Bloomberg reported on Friday. The hedge fund said it holds a "cautiously optimistic" view on Chinese equities, supported by valuations, policy and potential capital flows. In a September letter to investors, Bridgewater said China's third-quarter stock decline was mainly driven by liquidity factors, with valuations still not high and low bond yields potentially pushing more capital into equities. The firm said its China assets stance remains "positive," though its views are adjusted as market conditions evolve. Gold's bullish and bearish drivers are now "broadly balanced" in a rate-hiking environment, prompting the firm to gradually cut its prior overweight allocation. Bridgewater added to crude oil during the third quarter and expects supply disruptions and low inventories to push prices higher in the fourth quarter. Bridgewater China, which manages more than 60 billion yuan ($9 billion), is increasing the weight of active management. Its All Weather Plus strategy returned 5.3% in the first three quarters before fees, with a roughly 1% loss in the third quarter.