Chinese ADRs pulled back in premarket trading after a significant rally. YINN fell 4.5%; XPeng fell 6%; Bilibili fell 4%; Alibaba and JD.com fell 3%; Baidu fell 2.6%; PDD Holdings fell 2%.

Global hedge funds have been snapping up Chinese stocks for much of this year, with their buying accelerating in the past week as the emergence of homegrown artificial intelligence startup DeepSeek fueled investor enthusiasm, Goldman Sachs said in a note.

Onshore and offshore Chinese equities combined are by far the "most notionally net bought market" on Goldman Sachs' prime brokerage book across the world, the bank said in a note to clients citing data until February 7, seen by Reuters this week.

The week between February 3 and 7 recorded the strongest purchase by hedge funds in over four months, the bank said.

DeepSeek's breakthrough low-cost AI model has become a catalyst for the revaluation of Chinese assets among global investors that are already worried about the peaking valuation of U.S. stocks.

Billionaire David Tepper's Appaloosa LP significantly raised its stakes in Chinese internet giants Alibaba and JD.com during the fourth quarter, according to a securities filing this week, making both firms one of his hedge fund's largest positions.

Goldman Sachs said 95% of the buying last week was in single stocks, led by sectors including consumer discretionary, information technology, industrials and communication services.

Energy, utilities, and real estate were dumped by hedge funds during the period.

Hedge funds' allocation to Chinese equities now stands at 7.6% of Goldman Sachs' total prime book exposure, ranking in the 23th percentile in the past five years, up from roughly 10th in January.