Hedge funds slash Asia bets by most in four years, says Goldman Sachs

China dominated reduction in emerging markets in Asia, led by hedge funds trimming bullish wagers, Goldman Sachs added.

Hedge funds moved to unwind bullish and bearish wagers in Asia on Monday, after dumping bets in the US and Europe on Friday, Goldman Sachs Group Inc. said in a note to clients on Wednesday.

The Wall Street bank saw the largest decline in hedge fund positions in the region on Monday in four years, it said in the note, without specifying the type of assets.

About 75% of the fall was in developed markets, led by Japan, where hedge funds rushed to cover shorts and sell down long positions, it added. China dominated reduction in emerging markets in Asia, led by hedge funds trimming bullish wagers, it added.

The Asia move followed the biggest two-day reduction in four years in bullish and bearish wagers that Goldman Sachs’s hedge fund clients have with the bank globally.

With a record ramp-up in Asia positions last month, key regional markets still saw positive inflows this year, inclusive of both longs and shorts, the note said.

Asia-focused fundamental long-short managers were up 0.9% month-to-date and 4% this year, the note said. China managers led regional returns, up 1.4% on average this month and 6.9% this year.

Global fundamental long-short managers are down 3% in March already, widening the decline that began in mid-February. They are down an estimated 1% this year, the note said.