The bank's strategists said the selloff may leave technology, media and telecom stock trading more reliant on retail investors, while forced selling in semiconductor and memory-chip names may not be over.
Technology, media and telecom stock trading may become more dependent on retail investors and more volatile after July's severe selloff battered long-short hedge funds (funds betting on rising and falling stocks), JPMorgan said on Aug. 6. Strategist Nikolaos Panigirtzoglou and colleagues cited Pivotal Path data showing those hedge funds lost more than 10% in July. That drawdown does not yet include the Situational Awareness fund, which was forced last week to sell most of its public equity portfolio after a sharp selloff in semiconductor and technology shares. Panigirtzoglou said the episode suggests other tech-focused equity long-short hedge funds may also have faced forced liquidations (sales triggered by market stress) in semiconductor and memory-chip stocks.