Hedge funds significantly reduced both long and short positions in Asia on Monday, following a wave of unwinding in the US and Europe last Friday, according to a report by Bloomberg citing a client note from Goldman Sachs Group Inc.
Goldman reported that Monday’s decline in hedge fund positions in Asia was the largest in four years, though it did not specify the asset classes affected. Approximately 75% of the reductions occurred in developed markets, with Japan seeing the sharpest shift as funds scrambled to cover shorts and scale back long positions. In emerging markets, China led the decline as hedge funds trimmed bullish bets.
This regional repositioning follows the biggest two-day reduction in global hedge fund exposures in four years, as Goldman’s hedge fund clients aggressively unwound positions across markets.
Despite the recent selloff, key Asian markets have still recorded net inflows this year, as hedge funds had built up record-high positions in the region last month.
Asia-focused fundamental long-short hedge funds remain in positive territory, up 0.9% month-to-date and 4% year-to-date. China-focused managers have outperformed, gaining an average of 1.4% in March and 6.9% so far in 2024.
In contrast, global fundamental long-short hedge funds have struggled, posting a 3% decline in March, extending losses that began in mid-February. They are now down approximately 1% year-to-date, according to the note.
