A combination of increased regulatory checks, government policy uncertainties and a slowing economy are prompting some Asian hedge funds to cut their exposure to offshore Chinese assets in favour of non-China stocks, according to a report by Reuters.

A combination of increased regulatory checks, government policy uncertainties and a slowing economy are prompting some Asian hedge funds to cut their exposure to offshore Chinese assets in favour of non-China stocks, according to a report by Reuters.

The report cites regulatory filings as revealing that several China-focused managers including HHLR Advisers, Apex Management, and Tairen Capital have all reduced their holdings in US-listed Chinese stocks.

Three of HHLR Advisers' top five US-listed holdings in Q2 were non-China companies compared with just one in the second quarter of 2021, 13F filings to the US Securities and Exchange Commission show.

HHLR is one of the largest offshore China managers and known for its heavy positions in US-listed Chinese stocks. 

Four out of five of Hong Kong-based Aspex Management's top buys among US-listed firms in the second quarter were also non-China names, and the firm's non-China exposure now accounts for about 31% of its top 10 US-listed holdings, a significant increase from about 15% in the first quarter of 2022, or 14% in the same period last year.

Tairen Capital's largest US stock listing position in Q2 2021 was Chinese e-commerce platform Pinduoduo with a stock market valuation of £200 million, but having sold that stock over the following two quarters Microsoft is now the fund's largest position.