Asia Hedge Fund Trading Hits 5-Year High: Goldman Sachs

• Global hedge funds saw the biggest rise in Asia trading volumes in over five years, led by bullish positions in Japan, Hong Kong, Taiwan and India.
• U.S.- China trade talks and South Korea's market-friendly election fueled optimism and capital inflows.
• MSCI Asia-Pacific Index climbed 24 percent since April 7, driven by tariff suspension and trade progress.

Last week, global hedge funds recorded the largest increase in their trading volumes in markets of Asia in more than five years based on a note by Goldman Sachs.

Buyers and short-sellers were trading as a range of Asian bullish positions exceeded bearish assets over the long-term on their highest level in September 2024 - coming ahead of bearish positions stated the Goldman note, released on Friday and read by Reuters on Tuesday.

Last week, hedge funds purchased equities at Japan, Hong Kong, Taiwan and India but shorting equities onshore Chinese stocks, said Goldman. Asian shares fortified their robust rally last month as U.S. and China held high-level trade talks in London which increased optimism that an end solution to the trade war edges closer, and South Korea had an election that bolstered capital inflows as a new market-friendly president was chosen.

Market players noted the de-dollarization trend to act as a counter against the continued weakness of the U.S. dollar also helped to boost the wide Asian markets.

"If you are an international investor, you might start to rotate back to either your own markets or Asia that has been under appreciated," said Kier Boley, co-head and CIO of UBP Alternative Investment Solutions.

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The MSCI Asia-Pacific Index (.MIAP00000PUS), opens new tab has climbed 2.5 percent this month, with gains in the Korean and Taiwan exchanges having been the biggest. The index has risen 24 percent since April 7 fueled by a 90-day suspension of an increase in higher U.S. tariffs combined with indications of progress in trade talks.

“The share of developed Asia markets in hedge funds' total exposure tracked by Goldman rose to 9%, ranking in the 94th percentile in the past five years,” Goldman said.