Hedge funds record decade-high weekly buying in Korea, Japan, Taiwan equities, Morgan Stanley says

By Summer Zhen

HONG KONG, May 12 (Reuters) – Global hedge funds ramped up bets on Asia, with weekly buying of South Korean, Japanese and Taiwanese stocks hitting a 10-year high last week, according ​to a Morgan Stanley client note.

Most of the equities buying “took ‌place outside the U.S. with APAC driving the majority of the activity,” said a Morgan Stanley prime brokerage team note that was sent to clients on Friday. It was seen by Reuters on Tuesday.

The hedge fund inflows into South Korea, Japan and Taiwan ‌came from “clients ​across all regions/all strategies,” driving the week that ⁠ended on May 7 ⁠to be the heaviest week of buying in more than a decade in notional terms, the bank said, without providing specific figures.

Notional buying refers to gross buying volumes.

Global investors have rushed to gain exposure to ​Asian tech firms as they seek artificial intelligence beneficiaries. South Korea, Taiwan and Japan have emerged as key sites for semiconductor and hardware investment.

Asia’s ⁠three most valuable companies are chipmakers – Taiwan ⁠Semiconductor Manufacturing Co, Samsung Electronics and SK Hynix – and ​their recent record earnings have put a spotlight on their critical roles in the ​global AI supply chain.

“We are still early in the international tech ‌cycle, and Asia remains underowned, undervalued and increasingly central,” said Hussein Sacoor, a partner at Tekne Capital, a New York-based hedge fund.

In terms of cost and bill of materials, roughly 90% of the tech supply chain sits ⁠in Asia, while most capital remains concentrated in U.S. markets, he added.

Major benchmarks in South Korea, Taiwan and Japan all hit fresh highs last week.

Morgan Stanley ⁠said buying orders last ‌week were focused on semiconductors and hardware.

Hedge funds’ net ⁠exposure to Japan, South Korea and Taiwan rose to ​the ‌highest point since Morgan Stanley’s prime brokerage team began ​tracking the ⁠data in 2010, now accounting for about 19% of global positioning, the bank added.

A separate note by Goldman Sachs said April had the largest monthly hedge fund buying inflows into Asian equities in a decade after a sharp selloff in March.

(Reporting by Summer Zhen; Additional reporting by Ankur Banerjee in Singapore; Editing ​by Thomas Derpinghaus)