ASIA hedge funds, including Long Corridor Asset Management Ltd., bought shares of sanctioned Chinese telecommunications operators, trading against a market sell-off.

Long Corridor acquired a small amount of shares, Hong Kong-based chief investment officer James Tu said.

At least three other Asia-based fund managers also bought shares, lured by handsome dividend yields offered by the already undervalued stocks, said people with knowledge of the matter. The four hedge funds manage about US$8 billion collectively.

The dumping frenzy created a buying opportunity for hedge funds seeking to profit from volatile markets in the twilight days of Donald Trump’s presidency. U.S. investors are barred from backing these Chinese firms.

MSCI Inc. and S&P Dow Jones announced last week they would drop Hong Kong-traded shares of China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd. from benchmarks.

That prompted index-tracking funds to unwind positions at short notice, pushing the shares’ trading volume to 18 times the daily average of the previous three months. The world’s largest money manager BlackRock Inc. also reduced its holdings and plans to keep selling, a person familiar said.

“The technical selling that culminated Jan. 8 provided an entry opportunity on these telecommunications names which are already beaten down,” said Tu, whose US$220 million hedge fund returned 46 percent last year.

Shares of China Unicom sank as much as 11 percent in Hong Kong on Friday, while China Mobile and China Telecom dropped around 10 percent during trading hours. The firms have since recovered, partly helped by mainland investors. (SD-Agencies)