The Bank of England’s Prudential Regulation Authority has begun scrutinizing the Asian stock risks of investment banks and hedge funds based in London, according to a July 29 Financial Times report. The move aims to prevent excessive concentration of investments in a small number of Asian AI-related companies. Institutional investors, including hedge funds operating in the UK, poured money into Asian AI firms such as South Korea’s SK Hynix, Taiwan’s TSMC, and China’s Cambricon Technologies. The FT highlighted the risk that a sharp decline in these stocks could transfer losses to major banks, potentially triggering a chain of defaults. This investment structure echoes the 2021 collapse of Credit Suisse, caused by Korean-American financier Bill Hwang’s Archegos Capital, which borrowed five times its capital—$50 billion—to invest in Chinese stocks and other assets through derivatives. The FT pointed to SK Hynix’s 15% plunge on July 28, erasing over $100 billion in market capitalization, as a risk factor, and noted that Chinese semiconductor firm ChangXin Memory Technologies surged 466% on its Shanghai debut on July 27 but could collapse just as quickly. The BoE fears cascading defaults and is monitoring whether clients engaged in leveraged investments are increasing their derivative bets or if hedge funds are attracting short-term individual funds from Asia. If deemed risky, the BoE could raise liquidity asset requirements for banks.