Goldman Sachs reports Asia-based hedge funds face record losses in July

Asia’s hottest hedge funds just learned a painful lesson about momentum: it works both ways. Goldman Sachs reports that Asia-focused long/short equity hedge funds suffered an average loss of 18.6% through July 28, marking the single worst month on record for the strategy. The carnage was concentrated in AI and semiconductor stocks, the same trades that had propelled these funds to eye-watering returns earlier in 2026. Peak year-to-date gains hit 40% on July 22. By the end of the following week, 21 percentage points of that had evaporated. From triple-digit returns to record drawdowns Earlier this year, Asia-based hedge funds loading up on semiconductor and AI hardware names were the envy of the industry. Some posted triple-digit returns in the first half of 2026, riding a wave of enthusiasm around artificial intelligence infrastructure buildout across the region. The WT China Fund was a poster child. It surged 120% in the first six months of the year. Then it dropped 17% between July 1 and July 17. Keystone Investors’ fund followed a similar arc, climbing 63% through the first half before giving back 12% in the July reversal. The losses were primarily tied to long positions in AI h...