Kyle Su's Kuark Capital launches $400 million Asia tech

Synopsis

Kuark Capital is launching a new hedge fund. It has raised over $400 million. The fund will focus on Asian artificial intelligence stocks. Taiwan and Japan are key markets. The strategy involves a low-net equity long-short approach. This aims to manage market volatility. Investor interest in Asian AI firms is growing.

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A Hong Kong-based fund manager is launching a new hedge fund to tap rising investor interest in Asian artificial intelligence stocks, with a focus on Taiwan and Japan, three sources familiar with the matter said.

Kuark Capital, led by Taiwanese Kyle ‌Su, has secured ⁠at least $400 ⁠million before launching the hedge fund, said one of the three sources, all of whom declined to be named as they were not authorised to speak to the media.

Su did not respond to requests for comment.

The ​hedge fund's debut comes as a sharp tech stock rally in Asia, from China to South Korea, has spurred investors to seek more exposure to AI firms in the region.

Investor interest ​has been fuelled by the region's central role in the ⁠AI supply ‌chain, from chip making to packaging and materials. Global asset allocators are ​also looking ​at undervalued opportunities to enhance their returns.

Asia equity long-short funds on average ⁠posted a 10% gain in the first four months of this ​year, outperforming other regions and outpacing a 5.2% average gain globally, ​according to Morgan Stanley prime brokerage data.

The concentration of semiconductor stocks in the Asia-focused long-short funds contributed to the performance, the data showed.

Kuark Capital plans to adopt a low-net-equity long-short strategy, meaning it will look for both bullish and bearish stock ideas while keeping overall market exposure limited.

Market participants said low-net strategies have gained traction in recent years, as they require fund managers ‌to protect downside risks amid increased volatility in global markets.

Su previously managed a roughly $1 billion equity portfolio at Kadensa Capital for about nine years, according to a Kuark investor presentation seen by Reuters.

Kadensa Capital ⁠is a Hong Kong-based hedge fund focused on Asian investments.

Kuark's presentation said its strong local networks in Taiwan and Japan, along with Su's engineering background, give it an edge in uncovering investment ideas ​across the region.

Kuark has hired Hiro Ikeda, a Japanese-Taiwanese veteran investor with experience at Optimas Capital, Fidelity and T. Rowe Price, as director of research. Ikeda also did not respond to requests for comment.

Ikeda managed a low-net mandate for Optimas Capital - which received an allocation from New York-based hedge fund Millennium Management last year - in Hong Kong for four years, according to Kuark's presentation.

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