The recent rally in Chinese stocks could catch investors out, according to a UBS chief investment officer, who warned of a "pain trade."
He added that, if the positive news continues, Chinese markets could climb further.
Tactical trade However, Zuercher said there could be a "tactical trade" over the coming weeks or months, as hedge funds potentially suffer.
I do think a lot of hedge funds are also probably mispositioned in this area," Zuercher said.
Hedge funds often use a long-short strategy, where they buy stocks in the same sector, betting that one will go up and the other down.
Persons:
Gina Raimondo, Adrian Zuercher, CNBC's, Zuercher, — CNBC's Evelyn Cheng, Elliot Smith
Organizations:
UBS, U.S
Locations:
Asia, Pacific, U.S