BlockBeats News, July 30th - A report from Goldman Sachs revealed that Asia-focused stock hedge funds are facing their largest monthly drawdown on record, driven by a widespread sell-off of AI concept stocks. This sell-off has erased most of the previous gains from the sector on which the market had heavily bet. Goldman Sachs stated that as of July 28th, Asia-focused fundamental long-short equity hedge funds have, on average, dropped by 18.6% this month. In the first half of this year, these funds became one of the best-performing globally due to early bets on AI hardware leaders, including South Korean chipmaker SK Hynix and Samsung Electronics. Some funds saw their returns soar by over 100%. However, the market has now seen a sharp reversal. Since reaching a peak with a year-to-date return of 40% on July 22nd, these funds have given back 21 percentage points of their year-to-date gains.

Goldman Sachs noted that the crowded AI trades that drove the funds significantly higher in the first half of the year are now "the key factor behind the unusually large drawdown this month". Funds with higher AI thematic exposures suffered more severe losses. Faced with the market's intense volatility, hedge funds have been realizing profits and reducing risks. According to Goldman Sachs data, as of July 27th, Asian hedge funds have been reducing their exposures for eight consecutive trading days, with the "five-day cumulative total exposure reduction" hitting a historical high. (FXStreet)