Major Wall Street banks such as Citi, JPMorgan Chase, and Goldman Sachs are tightening leveraged trades by hedge funds going long on Asian chip stocks like SK Hynix, Samsung Electronics, and TSMC through swap contracts. Measures include raising financing costs, limiting the size of new trades, tightening counterparty standards, with some banks outright rejecting new applications or reviewing them on a case-by-case basis. This move comes after significant rallies in Asian chip stocks, prompting banks to guard against potential pullback risks and manage credit risk exposures, indicating a systematic compression of leverage space for hedge funds in the Asian chip sector.
