AI-linked selloff sends Kospi down 22% and Nikkei 225 down 8%, driving a record 15.2% July drawdown for Asian hedge funds
AI Market Summary
A sharp July selloff in AI and semiconductor-linked equities across Japan and South Korea drove significant index declines (Nikkei -8%, Kospi -22%) and triggered a record ~15.2% average drawdown in Asia stock-picking hedge funds, highlighting crowded positioning and leverage sensitivity. While some banks argue the semiconductor cycle remains structurally supportive, near-term risk appetite and factor exposures in Asian equities look pressured as ETF and multistrat unwinds continue.
Impact level
● Medium
Affected assets
NCSINIKKEI2252USD/USDT-0.70%
AI Insight · NCSINIKKEI2252USD/USDTAI Insight
▼ Bearish
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A July selloff in AI-related stocks dragged major Asian benchmarks including South Korea’s Kospi and Japan’s Nikkei sharply lower, pushing Asia-focused equity hedge funds into an average 15.2% drawdown, the steepest on record. Some of the region’s largest multistrategy platforms posted monthly losses of 3% to 9%, according to Reuters. Hong Kong-based Polymer Capital Management lost 6.9% for the month.
