Hedge fund flows into Asian markets surged to a five-year high last week, signalling a renewed appetite for the region as macro conditions and geopolitical developments drive capital rotation, according to a report by Bloomberg citing a new note from Goldman Sachs.
Between 6 and 12 June, global hedge funds sharply increased trading volumes across Asia, with long positions outpacing shorts to reach their most bullish stance since September 2024, the note said. This marks the largest weekly increase in Asia-related activity from hedge funds in over half a decade.
Goldman’s data shows that managers bought equities in Japan, Hong Kong, Taiwan, and India, while shorting mainland Chinese stocks. The rotation reflects growing investor conviction around select regional opportunities, despite lingering structural challenges in China.
The surge in activity comes amid resurgent investor confidence in Asia, driven by a number of factors. US-China trade talks in London have raised hopes for a potential de-escalation in economic tensions, while South Korea’s market-friendly presidential election outcome has spurred inflows.
De-dollarisation themes meanwhile, are prompting some global allocators to diversify exposure back into Asian assets.
The MSCI Asia-Pacific Index is up 2.5% month-to-date, led by gains in Korea and Taiwan. Since early April, the benchmark has surged 24%, boosted by a temporary halt on new US tariffs and optimism around global trade dialogue.
Goldman notes that the share of developed Asia in hedge funds’ total gross exposure has climbed to 9%, ranking in the 94th percentile over the past five years. This suggests a strategic pivot back toward regional markets that had seen underweights in recent quarters.
