Global hedge funds saw their largest weekly selloff in emerging Asia equities in more than five months last week, as investors trimmed positions ahead of the region’s major holiday season, according to a report by Reuters citing a Goldman Sachs client note.

The selling was concentrated in Chinese onshore and offshore stocks, followed by India and Taiwan, between September 19 and 25. The MSCI EM Asia Index fell 1.6%, snapping a three-week rally, with profit-taking particularly evident in technology stocks.

Chinese onshore investors also reduced leverage, with the Shanghai Composite recording its largest daily margin balance reduction since April 2025, reflecting broader risk-aversion ahead of Golden Week.

Despite the pullback, emerging Asian equities have outperformed global markets this year, boosted by US interest rate cut expectations and China’s AI-driven growth. The MSCI EM Asia Index is up 24% year-to-date, compared with a 15% gain in the MSCI World Index. Korean shares have surged 41% YTD, while China’s Shanghai Composite reached a decade high earlier this month.