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Asia hedge funds slide in July selloff after AI-driven gains
WT China Fund sank 17% through July 17 after jumping 120% in the first half, as renewed swings hit crowded AI-related positions.
Asia-based hedge funds have been pulled into a July selloff after the AI and technology hardware surge drove large gains earlier this year, according to LiveMint, citing Bloomberg. The rapid reversal has pressured crowded bets in regional markets and contributed to sharp intra-month declines.
WT China Fund, led by Wang Tongshu, fell 17% this month through July 17 after soaring 120% in the first six months. Keystone Investors Pte’s hedge fund retreated 12% through the same day after surging 63% in the previous six months, while other funds including FengHe Asia, CloudAlpha Capital Management, and Indus Capital Partners also posted declines.
Morgan Stanley prime brokers attributed the pressure to renewed swings in crowded AI-related stocks, a reversal of momentum trades, and geopolitical uncertainty. The selloff has eased this week and some fund performances have started to rebound, but observers expect losses to be broader given that many funds do not release performance updates within the month.
Among popular trades, SK Hynix Inc.’s South Korea-listed shares have lost about 28% in July, and Kioxia Holdings Corp. is down about 28% for the month and around 40% from its peak. Funds had increased exposure in anticipation that AI demand would extend beyond training into applications, boosting chip, energy storage, cooling, and server-component needs, alongside interest in Chinese AI-related names.