Goldman Sachs said Asia-focused managers were hit by a sharp unwind in crowded semiconductor positions, erasing 21 percentage points from peak 2026 gains in a week.
Asia-focused long/short equity hedge funds logged an average loss of 18.6% through July 28, their worst month on record, as a heavily crowded bet on AI and semiconductor stocks reversed sharply, Goldman Sachs said. The strategy had been one of the region's standout performers earlier in 2026, with peak year-to-date gains reaching 40% on July 22 before 21 percentage points disappeared by the end of the following week. The pullback was centered on AI hardware and chip names that had previously driven outsized returns. The WT China Fund rose 120% in the first six months of 2026, then fell 17% between July 1 and July 17. Keystone Investors' fund climbed 63% in the first half before giving back 12% during the July reversal. Goldman said losses were mainly linked to long positions in SK Hynix and Samsung Electronics, two stocks that had become consensus overweights across Asia-focused funds, magnifying the downturn as managers rushed to cut similar positions. Goldman's data showed Asian hedge funds reduced exposure for eight straight trading days through July 27, with cumulative cuts reaching record levels. The bank said interest in value investing within crypto appeared to gain traction during the equity selloff. The sustained de-risking may indicate the worst of the forced selling is easing, but with average fund gains for the year roughly halved, investors in Asia tech may need to watch fund flow data for evidence that deleveraging is truly ending.