Asian tech stocks have continued to decline in recent weeks, triggering a round of deleveraging from retail to institutional investors. Margin balances in markets such as South Korea have fallen significantly, and some funds heavily invested in the AI industry chain are facing liquidation pressure due to losses. Semiconductor and software stocks have become the focus of this volatility.
South Korean margin trading has contracted significantly.
Data compiled by Bloomberg shows that margin financing balances in Asian markets, including South Korea, have fallen by more than 10% since late June. Previously, such leveraged funds had been a significant driver of local stock market rallies, particularly in the semiconductor sector.
According to Bloomberg Intelligence data, the assets under management of leveraged ETFs listed in South Korea, namely Samsung Electronics and SK Hynix, have fallen from over $11 billion on June 25 to $4.1 billion on Thursday. Over the past two weeks, these products have also experienced net outflows.
AI funds reportedly liquidated significantly.
More notably, Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, is reportedly liquidating almost all of its open market positions to raise cash to meet margin requirements.
The report mentions that the fund's lead brokers include Bank of America, Goldman Sachs, and JPMorgan Chase. Sources familiar with the matter say that Citadel has reached an agreement to acquire the fund's publicly traded assets. The extent of the fund's losses and specific financing needs have not yet been confirmed.
Holdings are concentrated in AI infrastructure
According to reports, the fund's size once rose to $45 billion in early July, but subsequently suffered significant losses due to a decline in holdings related to AI infrastructure and losses from shorting software stocks.
According to regulatory filings, its major holdings at the end of the first quarter included Nebius Group, SanDisk, Micron, and CoreWeave, all of which have fallen by more than 35% this month. Meanwhile, stocks such as SK Hynix also overlapped with popular stocks traded by Asian retail investors with high leverage, and the simultaneous deleveraging by both institutional and retail investors further amplified selling pressure.
Additional information:The report also mentioned that the fund had previously negotiated the sale of its Anthropic shares, but it is unclear whether the transaction has been completed; a fund spokesperson denied that it was marketing its Anthropic shares.
