Hedge funds log biggest weekly selloff in over 5 months in Asia EM stocks, Goldman says

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By Summer Zhen

HONG KONG (Reuters) -Global hedge funds recorded their largest weekly selloff in emerging Asia equities in more than five months last week, ahead of a major holiday season, according to a client note from Goldman Sachs seen by Reuters.

Market participants attributed the selloff to profit-taking, particularly in technology stocks, as investors sought to reduce exposure ahead of potential market uncertainties during the long holidays.

The hedge fund selling was led by Chinese equities – both onshore and offshore – followed by India and Taiwan, for the week between September 19 and September 25, Goldman Sachs’ note, dated Friday, said.

The MSCI EM Asia equities Index ended last week down 1.6%, snapping a three-week rally.

Also reflecting the risk aversion sentiment before the holiday were Chinese onshore investors. They have rushed to lower leverage, with the Shanghai Composite recording “largest daily trimming of margin balances” on Friday since April 2025, said Wee Khoon Chong, APAC market strategist at BNY.

Emerging Asian stocks have far outperformed global markets this year buoyed by U.S. interest rate cut expectations and China’s artificial intelligence boom.

The MSCI EM Asia equities Index surged 24%, compared to a 15% gain in the MSCI World.

Within the region, Korean shares hit an all-time high last week, jumping 41% year-to-date. China’s benchmark Shanghai Composite also reached a decade high earlier this month.

China will begin its eight-day Golden Week holiday on Wednesday.

South Korea will kick off a long holiday week from October 3 to 9, while the Taiwan market will be closed on October 6 and 10, and Hong Kong will be shut on October 1 and 7.

(Reporting by Summer Zhen; Editing by Harikrishnan Nair)