Global hedge funds stepped up their selling of emerging Asian equities last week, marking the heaviest net outflows from the region in nearly a year, according to a report by Bloomberg citing a client note from Goldman Sachs.
The move reflects a sharp increase in risk aversion amid escalating geopolitical tensions.
The sell-off – driven largely by short-selling – was most pronounced in Taiwan, South Korea and India, while positioning in China saw comparatively limited bearish activity. The flows, tracked through 19 March, represent the most significant weekly selling since April 2025, when global markets reacted to sweeping tariff measures introduced by the Trump administration.
The escalation of the Iran conflict contributed to broad-based risk reduction, with hedge funds turning net sellers across all major regions. In dollar terms, North America and emerging Asia led the outflows. Despite the recent pullback, overall hedge fund exposure to emerging Asian markets remains close to historic highs.
Markets in Taiwan and South Korea—both heavily weighted toward semiconductor stocks—have been among the strongest performers globally this year, supported by investor demand linked to artificial intelligence. Key names such as Samsung Electronics, SK Hynix and TSMC have attracted significant inflows.
However, sentiment weakened at the start of the week, with Taiwan’s benchmark index falling around 5% and South Korean equities declining roughly 3% in early trading, as tensions between the US and Iran intensified.
