Hedge funds shifted strategies on Monday, shedding bullish and bearish positions in Asia after a significant reduction of bets in the U.S. and Europe last Friday, according to a client note from Goldman Sachs Group Inc.
The note pointed out that the sharpest decrease in hedge fund positions in the Asian region in four years occurred on Monday, though it did not specify which asset types were involved.
Approximately 75% of this decline took place in developed markets, with Japan leading the rout as funds scrambled to cover shorts and offload long positions. In the emerging markets of Asia, China led the reduction as hedge funds scaled back on bullish positions.
The activity in Asia came on the heels of the largest two-day decrease globally in bullish and bearish bets that Goldman Sachs’s hedge fund clients held with the bank in four years.
Despite the recent sell-off, key Asian markets have experienced positive inflows this year, accommodating both long and short positions, the note highlighted.
Asia-focused fundamental long-short hedge managers reported a 0.9% increase month-to-date and a 4% rise for the year, with Chinese managers driving these gains by averaging a 1.4% rise for the month and a 6.9% increase year-to-date.
However, globally-focused fundamental long-short managers have already suffered a 3% decline in March, exacerbating losses that began in mid-February, and marking a 1% drop for 2023 overall, according to the note.
