Hedge funds hit by AI selloff; Asia managers lead losses

Global hedge funds suffered steep losses this week, driven by a violent unwind of AI-related bets, with Asia-focused funds hit hardest, according to a Goldman Sachs note. Investors increasingly question whether massive AI spending can pay off amid high inflation and borrowing costs. Global fundamental long-short funds lost money every day this week, totaling 2.9% through October 15, though they remain up 14.3% year-to-date. On Wednesday, Asia-focused managers fell 2.6% and tech-focused funds dropped 2.0%, triggered by hotter-than-expected US inflation data. Semiconductor-heavy markets bore the brunt, with South Korea's KOSPI tumbling 8% to a six-month low and Taiwan stocks losing over 3%. Asia-focused stock pickers have erased more than half their gains from a late-June peak.