Asia Hedge Funds Hurt by July Selloff After Strong First Half

Asia-based hedge funds have been hit by a sharp July selloff after posting double- or triple-digit returns in the first half of 2026, driven by a pullback in AI and semiconductor stocks. Memory chip leaders SK Hynix and Kioxia each lost about 28% of their value this month, while Chinese AI names like Z.AI shed more than half before partially rebounding. DWS has downgraded the global semiconductor industry from positive to neutral, arguing much of the AI demand optimism is now priced in, though the broader AI thesis remains intact.