Global hedge funds are making a historic pivot toward Asia. According to a Morgan Stanley prime brokerage note, the week ending May 7 saw the heaviest weekly buying of equities in South Korea, Japan, and Taiwan in more than a decade.
The buying was broad-based, the bank said, coming from clients across all regions and strategies. Notional volumes hit a ten-year high, though specific figures were not disclosed.
The inflows target semiconductors and hardware, as investors seek exposure to Asian tech firms critical to the global AI supply chain. Taiwan Semiconductor Manufacturing Co, Samsung Electronics, and SK Hynix-Asia's three most valuable companies-have posted record earnings, underscoring their central role.
Hedge funds' net exposure to these three markets rose to the highest point since Morgan Stanley's prime brokerage team began tracking in 2010, now accounting for about 19% of global positioning.
"We are still early in the international tech cycle, and Asia remains underowned, undervalued and increasingly central," said Hussein Sacoor, a partner at Tekne Capital.
A separate Goldman Sachs note confirmed the trend, reporting that April saw the largest monthly hedge fund buying inflows into Asian equities in a decade, following a sharp selloff in March.