Hedge funds suffer as AI bets unravel amid rate fears
Business
Hedge funds around the world are feeling the sting as their big bets on artificial intelligence, or AI, start to unravel.
Rising inflation and talk of more interest rate hikes have investors worried, leading to sharp losses; Asia-focused stock pickers dropped 6.8% in early October 2026, while global fundamental long-short hedge funds slid by 2.9%.
Higher borrowing costs prompt AI rethink
Higher borrowing costs and tighter money policies have made people rethink how much AI investments are really worth.
Semiconductor-heavy markets like South Korea's KOSPI fell nearly 8%, and Taiwan's dropped over 3%.
The recent slump has erased over half the gains Asia-focused hedge funds made since June, showing just how quickly things can change in fast-moving sectors like tech.