Global Market | Global funds turn bearish on emerging Asian markets amid rising geopolitical tensions

Global hedge funds sharply increased their selling of emerging Asian equities last week, marking the heaviest bout of selling since April 2025, according to a Goldman Sachs client note reviewed by Reuters. The shift underscores a growing wave of risk aversion among institutional investors amid escalating geopolitical tensions.

The scale of selling mirrors levels last seen in April 2025, a period marked by heightened global trade uncertainty following the announcement of steep tariffs by the Trump administration on key trading partners. The latest bout of risk-off sentiment appears to be driven by a different catalyst, with the intensifying Iran conflict weighing on investor confidence globally.

The selling activity, largely driven by short positions, was concentrated in key Asian markets including Taiwan, South Korea, and India, Reuters said citing the Goldman Sachs prime brokerage note covering the week through March 19. In contrast, bearish bets on Chinese equities remained relatively subdued, indicating a more cautious stance toward that market.


The selloff extended beyond Asia, with hedge funds turning net sellers across all major global regions. In dollar terms, North America and emerging Asia led the outflows, highlighting a broad-based reduction in risk exposure.

Despite the recent pullback, overall hedge fund positioning in emerging Asian markets remains near historically elevated levels, suggesting that investors have not fully unwound their exposure to the region.

The recent selling comes even as markets such as South Korea and Taiwan have been among the top performers globally this year. According to Reuters, strong investor interest in semiconductor stocks has driven gains in these markets, fueled by optimism around rising demand linked to artificial intelligence. Major companies such as Samsung Electronics, SK Hynix, and Taiwan Semiconductor Manufacturing Company have attracted significant inflows as investors bet on sustained growth in the AI-driven technology cycle.

However, the latest data indicates that even these high-performing markets are not immune to global risk-off sentiment, as hedge funds increasingly turn cautious in the face of geopolitical uncertainty and shifting macroeconomic dynamics.