(Fixes stock code in paragraph 5 and adds percentage signs to

performance table)

*

Triata Capital posted 44% return in September, driven by

investments in data centres and internet giants

*

Yunqi Capital's China Fund gained 26% due to bets on

internet

and fintech firms

*

Goldman Sachs ( GS ) estimates China-focused hedge funds had best

weekly performance on record

By Summer Zhen

HONG KONG, Oct 4 (Reuters) - Some China-focused hedge

funds are reporting explosive returns in September, thanks to a

sharp rebound in Chinese stocks driven by Beijing's aggressive

stimulus package.

The surge in stocks, which fuelled a 25% record jump over

five days last week in China's blue-chip CSI 300 Index

, catapulted Asian equity hedge funds to top performers

globally for the year so far.

Hong Kong's Triata Capital posted a return of as much as 44%

last month, taking its Jan-Sept performance to 56%. The $770

million China-focused fund held long-term investments in data

centres, internet giants, e-commerce and travel firms, and those

investments bore fruit.

"Great companies were trading at very discounted valuation,"

Sean Ho, chief investment officer of Triata Capital said in a

September investor letter.

Yunqi Capital's China Fund gained 26% before fees in

September. The fund said its bets on beaten-down U.S.-listed

Chinese internet and fintech companies such as Lufax ( LU ) holdings

and Qifu ( QFIN ) technology paid off. The fund also

picked companies that were increasing buybacks and dividend

payouts.

The bounce in Chinese stocks comes after three years of

shares being beaten down. Authorities launched their largest

post-pandemic stimulus, including interest rate cuts and a $114

billion war chest to boost share prices, last week.

The MSCI China index rose 24% in September,

its biggest monthly gain since November 2022.

The turnaround is a respite for Chinese funds that had been

suffering since the COVID-19 pandemic due to a sluggish economy

and geopolitical tensions. Analysts believe overseas money will

come back to Chinese funds if the rally is sustained and the

economy recovers.

Goldman Sachs ( GS ) estimates China-focused stock-picking hedge

funds returned 6% between Sept 23-27, their best weekly

performance on record. So far this year, broader Asian equity

hedge funds have gained 12%, leading the pace of gains globally.

Funds with lower net long positions on China

underperformed.

Singapore-based Keystone Investors, which adopts a low-net

strategy by making long and short bets on about 100 companies,

lost 4.8% for September, narrowing its year-to-date gains to

13.2%, according to a source familiar with its performance.

Keystone declined to comment.

Short-sellers on offshore Chinese stocks could have incurred

a loss of $6.9 billion in the last two weeks of September,

financial analytics firm S3 Partners estimates.

Steven Luk, chief executive of FountainCap Research &

Investment, said the stimulus package is comparable to the 4

trillion yuan program China unveiled during the 2008 Global

Financial Crisis, which set off a multi-year rally in stocks.

FountainCap's long-only China fund jumped 19% last month.

Don Steinbrugge, founder of Agecroft Partners, a hedge fund

consulting firm, said hedge fund strategies focused on China

will return over time, depending on how and when the Chinese

government stabilizes the property market and economy.

"However, we don't expect this increase in demand to take

place until early/mid 2025," he said.

Hedge funds performance:

Fund Sep Year-to-date

Triata 43.7% 55.7%

*Yunqi Capital - Yunqi Path Fund 26.3% 32.1%

WT China Fund 1.7% 20.8%

FengHe Asia 1.4% 13.8%

PinPoint China 11.6% 18.1%

PinPoint Multi Strategy 0.3% 6.2%

CloudAlpha Tech Fund 19.7% 36.8%

CloudAlpha - Singularity Tech 7.3% 38.9%

Fund

Keystone -4.8% 13.2%

IvyRock China Focus 18% 17.2%

FountainCap 18.6% 21.3%

Sources: Investors and funds

*Yunqi performance is gross of fees