Hedge funds pared back exposure to technology stocks in Japan and Hong Kong last week, positioning ahead of a subsequent sell-off in both markets, according to a report by Bloomberg citing a client note from the prime brokerage division at Goldman Sachs.
Data from the bank shows that Asia was the most heavily net-sold region, with hedge funds reducing long positions in Hong Kong equities while increasing short bets in Japan. The moves came shortly before declines in the tech-heavy Hang Seng and Nikkei indices, driven by concerns over stretched technology valuations and broader market uncertainty.
Selling activity was concentrated in technology and consumer stocks, as investors rotated away from sectors seen as vulnerable to a potential artificial intelligence-driven valuation bubble. The shift mirrored weakness in US tech markets, where semiconductor stocks also fell sharply.
In Japan, hedge funds redirected capital into industrials, financials and materials stocks. Banking shares, in particular, benefited as investors positioned for a potential Bank of Japan rate increase, which is expected to support lender profitability. Sentiment was further underpinned by stronger business confidence data from the central bank’s quarterly Tankan survey.
Elsewhere in the region, hedge funds continued to sell Chinese equities, which have now been net sold in four of the past five weeks, reflecting concerns over weak economic data and rising property-sector risks. Indian stocks were also modestly net sold, with activity focused largely on industrials and materials.
