Global hedge funds have ramped up exposure to Asian equities, with weekly purchases of stocks in South Korea, Japan and Taiwan reaching their highest level in over a decade, according to a report by Reuters citing a client note from Morgan Stanley.
The bank’s prime brokerage data shows that net inflows into the three markets surged in the week ending 7 May, driven by strong buying across strategies and regions. The activity marked the largest notional weekly allocation to the region in more than 10 years, although no specific figures were disclosed.
The bulk of the buying activity took place outside the US, with Asia-Pacific markets accounting for most of the flows, the note said.
The surge in allocations reflects growing investor interest in Asian technology and semiconductor companies, as hedge funds seek exposure to beneficiaries of artificial intelligence infrastructure build-out.
South Korea, Japan and Taiwan have become central hubs in the global semiconductor supply chain, led by major groups including Taiwan Semiconductor Manufacturing Company, Samsung Electronics, and SK Hynix. Strong earnings from these firms have reinforced their importance in global AI-related investment flows.
Morgan Stanley said hedge fund net exposure to the three markets has now reached its highest level since it began tracking the data in 2010, accounting for roughly 19% of global positioning.
Investor appetite has been supported by the view that Asia remains under-owned relative to its importance in global technology production. Some market participants estimate that the region accounts for the vast majority of global tech manufacturing capacity, while portfolio allocations remain heavily weighted toward US assets.
Hussein Sacoor of Tekne Capital said Asia continues to play a central role in global technology supply chains, particularly in semiconductors and hardware.
Market benchmarks in South Korea, Taiwan and Japan have all recently reached record highs, reflecting both strong corporate earnings and renewed foreign inflows.
Morgan Stanley noted that last week’s buying was concentrated in semiconductors and hardware stocks, while a separate report from Goldman Sachs highlighted that April saw the strongest monthly inflows into Asian equities in a decade following earlier market weakness.
The latest positioning data underscores a broader rotation by hedge funds toward Asia-focused technology trades amid the global artificial intelligence investment cycle.
