Positioning Update on Global Indices

FTSE China A50
Citigroup strategists reported a significant shift to heavily bullish positioning in the FTSE China A50 index last week. This change stems from investors unwinding profitable short positions, albeit some are realizing losses in this process. The notable increase in open interest indicates that investors are actively enhancing their long stance, thereby introducing new risks.

Hang Seng Futures
Conversely, Hang Seng futures have already experienced extended positioning before last week, with more mixed flows recently. Both the FTSE China A50 and Hang Seng indexes have shown strong bullish positioning, indicating increased investor exposure to Chinese markets.

> Citi strategists noted that this scenario could lead to heightened sensitivity to any downside surprises but highlighted that long positions on the A50 could still maintain profitability even with a 20% drop in index levels.

US Markets
In the US, bullish sentiment dipped for most of last week; however, sentiment improved on Friday following unexpectedly positive job numbers, renewing soft landing hopes. The S&P 500 continues to display highly extended positioning (+3.0 on a normalized scale of 5), while the Nasdaq 100 remains near a neutral stance.

The Russell 2000 reflected the most significant shift, transitioning from a very bullish position two weeks ago to a near-neutral stance due to a combination of unwinding long positions and adding short exposure. Overall, Citi mentions that the US markets are experiencing modest average profits and losses, easing pressure on positions.

> The balance in Nasdaq 100 suggests potential volatility could be amplified by position unwinds in either direction.

Europe
In Europe, positioning within the Euro Stoxx 50 index is close to neutral. Although bearish sentiment has waned over the past month, momentum has stalled, and investors have not shifted to net long positions. Investors appear to be adopting a more selective approach in their European exposures, evident through sector-specific ETF flows.