Asia hedge funds record AI drawdown
Analysis based on 6 articles · First reported Jul 30, 2026 · Last updated Jul 31, 2026
The record drawdown in Asia-focused hedge funds signals a sharp reversal in the AI trade, likely leading to further deleveraging and volatility in Asian equity markets, particularly in semiconductor stocks. The unwinding of crowded positions could pressure valuations of AI hardware names and trigger broader risk-off sentiment across the region.
Asia-focused equity hedge funds are heading for their biggest monthly drawdown on record, according to a Goldman Sachs prime brokerage note. The funds fell an average of 18.6% in July through July 28, giving back 21 percentage points of their year-to-date gains since peaking at 40% on July 22. The reversal follows a first-half rally driven by early bets on AI hardware leaders such as SK Hynix and Samsung Electronics, with some funds returning over 100%. Crowded AI positions have now become the main driver of losses, with funds having higher AI exposure suffering steeper declines. Asian semiconductor stocks tumbled, with South Korea leading the selloff; the KOSPI fell nearly 11% on July 28, its worst session in about five months. Hedge funds have reduced exposure for eight consecutive trading days through July 27, with the five-day cumulative de-grossing the largest on record. Selling has been concentrated in Taiwan, South Korea, Japan, and China. Vikas Pershad of M&G described the unwind as the largest he has seen in market capitalization terms, with elevated trading volumes amplifying both the rally and the decline.
Set up alerts, explore entity relationships, search across thousands of events, and build custom intelligence feeds.
Open Dashboard