Despite the recent selloff in AI stocks, Asian hedge funds have maintained the strong confidence in technology companies which has supported an otherwise stellar start to the year, according to a report by Bloomberg.
The report cites a unnamed source familiar with the matter as revealing that FengHe Fund Management’s $3.6bn fund reported gains of 11.3%, while CloudAlpha Capital Management’s Singularity Tech Fund saw a remarkable 28% increase in the first half of the year. The Eurekahedge Asian Hedge Fund Index rose by 4.6% during the six months ending in June, signalling a positive trend for the region’s hedge funds after two tumultuous years.
China remained a challenging market, however, with hedge funds focused on the word’s second largest economy underperforming. The Eurekahedge Greater China Hedge Fund Index returned just under 1% in H1, significantly lagging behind other regions.
FengHe Fund Management’s CEO, Kwek Hyen Yong, has attributed the fund’s success to a thorough analysis of the technology supply chain, which led to profitable investments in companies like South Korean memory maker SK Hynix and chipset designer ARM Holdings. The firm took profits by selling some positions in June, avoiding the market downturn in July when investors began cutting back on popular tech stocks such as Hynix, Nvidia and Alphabet.
“The current market volatility is similar to the internet-related corrections of 1998, which did not signify the end of the internet’s growth cycle,” Kwek said. He believes that valuations in many AI-related companies have now adjusted to more reasonable levels, and he plans to increase exposure in the second half of the year if prices decline further.
CloudAlpha Capital Management’s Singularity Tech Fund benefited from the AI infrastructure boom, particularly in semiconductor and hardware stocks. The fund’s investments are evenly split between Asia and the rest of the world.
Rays Capital Partners’ Asian Technology Absolute Return Fund surged 42% in the first half, driven by gains from AI proxies like Nvidia, ARM and Dell Technologies, as well as Taiwanese providers of AI server cooling solutions such as Asian Vital Components and Auras Technology.
The Kaizen Asia-Pacific Master Fund, meanwhile, rebounded with a 22% return, primarily from South Korean and Japanese semiconductor and capital goods investments, after struggling in 2023 following an investment in scandal-hit Dada Nexus, which overstated revenue in some quarters.
The Panview Asian Equity Fund experienced a 24.3% increase, supported by Japan’s equity market growth driven by governance reforms. The fund has consistently performed well since it began trading in November 2019.
Dymon Asia’s Multi-strategy Investment Fund delivered a 12.41% gain in H1. The fund’s cautious approach helped it avoid significant losses from July’s market reversals. The firm is strategically positioning for potential Bank of Japan rate hikes.
Chris Wang’s Yunqi Path Offshore Fund gained 13%, driven by investments in Qifu Technology, Lufax Holding and Full Truck Alliance. The fund sees increased capital returns to investors from Chinese companies as a positive trend.
Athos Capital’s event-driven hedge fund rose 10.9%, supported by shareholder-friendly measures from companies in Japan, China, and South Korea. The fund also profited from share class arbitrage and special situations trades.
