Hedge funds reduced their exposure to Asia-Pacific technology equities during the week ended August 20, marking the second-largest weekly retreat in global equity allocations over the past 12 months. The selloff, concentrated outside the U.S., targeted sectors including semiconductors, electronic equipment and hardware, which saw the most significant net reductions.
Net allocations to Japan, South Korea and Taiwan fell to approximately 17% from 23% in late June, according to data from Morgan Stanley’s prime brokerage desk. The decline reflected a combination of weaker relative performance and active de-grossing by funds, with U.S.-based and Asian hedge funds contributing nearly equally to the reduction.
The selloff unfolded gradually across multiple weeks rather than as a single large exit, following earlier gains in Asian AI hardware stocks. Prime brokerage desk members Bill Meany and Ayman Jagani noted that the retreat was part of a broader trend of profit-taking amid rising concerns over valuation levels in the region’s tech sector.
