Goldman Sachs: Hedge funds are bottom-fishing in Asian markets at the fastest pace in a decade.

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Due to growing optimism in the market towards artificial intelligence infrastructure companies, hedge funds recorded the largest net buying scale in emerging and developed Asian markets last week since Goldman Sachs began tracking related data in 2016.

According to a Goldman Sachs report, hedge funds turned net buyers of global equities last week—the first time in three weeks—with capital flowing into all major markets, but Asia stood out the most. The report notes that emerging markets continued to outperform as investors rotated out of momentum trades and responded to the weakening US dollar.

The MSCI Emerging Markets Index has risen 11% so far this year, while the Korea Composite Stock Price Index (Kospi) has climbed over 30%, boosted by large manufacturers such as Samsung Electronics and SK Hynix. By contrast, as of last Friday’s close, the S&P 500 Index had fallen 0.1%.

Goldman Sachs stated in a client report that trading in Asian markets last week was mainly driven by long buying, with the ratio of long positions established to short covering at 8.4 to 1.

Globally, Goldman Sachs said, buying strength in information technology, industrials, consumer staples, and materials sectors exceeded selling strength in other sectors. Discretionary consumption, communication services, and financial sectors suffered the most severe sell-offs.

Additionally, hedge funds have been selling US real estate sectors for the third consecutive week, at the fastest pace since September 2022, including both long liquidations and short additions. The report points out that the selling scale of specialized real estate investment trusts (REITs), real estate management and development companies, and industrial REITs exceeded the modest buying of hotel & resort REITs and healthcare REITs.

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