1 month ago
Asia Hedge Funds Face July Selloff After Strong First Half
Asia-based hedge funds had a great start to the year with big gains, but in July, many of them lost money.
This happened because of ups and downs in tech stocks, especially those related to artificial intelligence.
Some funds did well, like Eagle’s View Capital Management, which made money from the volatility.
Big tech companies like SK Hynix and Kioxia saw their stock prices drop a lot.
Investors are worried about how much big cloud companies will spend on tech, and some banks are making it harder to borrow money for these stocks.
Some experts think the good times for tech stocks might not last, while others believe the selloff is just a temporary setback.
Asia-based hedge funds faced a selloff in July after strong gains in the first half of the year.
WT China Fund lost 17% in July but was up 120% in the first half.
Keystone Investors Pte lost 12% in July but was up 63% in the first half.
SK Hynix Inc. and Kioxia Holdings Corp. stocks lost about 28% in July.
Investors are worried about spending plans of big cloud companies and the sustainability of tech stock earnings.
- Who
- Asia-based hedge funds, including WT China Fund, Keystone Investors Pte, FengHe Asia, CloudAlpha Capital Management, Indus Capital Partners, and Eagle’s View Capital Management
- What
- A selloff in July after strong performance in the first half of the year
- Where
- Asia
- When
- July 2024
- Why
- Renewed swings in crowded AI-related stocks, reversal of momentum trades, and geopolitical uncertainty
Optimistic View on Tech Stocks
Cautious View on Tech Stocks
Sustainability of Earnings
Optimistic View on Tech Stocks
The AI story in the semiconductor sector remains intact, and the July selloff likely reflected fund positioning more than stock fundamentals.
Cautious View on Tech Stocks
Current margins and growth rates may not be sustainable, and a large part of the positive expectations has been priced in.
Key facts
- WT China Fund Performance
- Lost 17% in July, up 120% in first half
- Keystone Investors Pte Performance
- Lost 12% in July, up 63% in first half
- SK Hynix Inc. Stock Performance
- Lost 28% in July
- Kioxia Holdings Corp. Stock Performance
- Lost 28% in July, 40% off peak
- Z.AI Stock Performance
- Lost over half value, then rebounded
- Indus Capital's Select Fund
- Accounts for 71% of the firm's $6.4 billion assets
Quotes
John Pinkel
Partner and manager of Indus Capital’s long‑only Select Fund
“"Investors who had a strong first half may have faced redemption or rebalancing pressure into quarter‑end," he said.”
livemint.com
Sources
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