AsianFin -- Global hedge funds are showing a renewed appetite for risk, increasing their exposure to Japanese equities while also taking on more short positions in South Korea.

A note from Morgan Stanley shows that this move into Japan occurred just before the Nikkei index hit an all-time high, driven by easing concerns over global tariffs.

The note, sent to clients on Tuesday, revealed that hedge funds significantly boosted their long positions in Japan last week, outweighing their short bets. This increase follows a period of reduced positioning in July and suggests a shift in confidence toward the Japanese market.

At the same time, funds are actively increasing their short positions in South Korea, signaling a more cautious outlook on that market.