By Summer Zhen

HONG KONG, Sept 6 (Reuters) - Some of Asia's large China-focused hedge funds are buying more non-China stocks as regulatory scrutiny, policy uncertainties and a slowing mainland economy force them to cut exposure to offshore Chinese assets.

Beijing's clampdown on technology companies, a real estate debt crisis, Sino-U.S. audit tensions and disruptions from zero-COVID policies, have hit sentiment, portfolio managers said, adding it was difficult to see how companies would grow.

"The past year has been extremely difficult for funds that are based in Hong Kong and focusing on investing in offshore China stocks," said a Hong Kong-based hedge fund portfolio manager, who declined to be identified due to the sensitivity of the subject.

"Many have had to cut exposure to China stocks and allocate some positions to the U.S. or Southeast Asia."

Hedge funds are aggressive users of leverage and derivatives to generate yields. China-focused funds have traditionally kept a large portion of portfolios in American Depository Receipts (ADRs) of mainland firms.

HHLR Advisers, an investment management firm under private equity firm Hillhouse Capital Group, had three non-China companies in its top five U.S.-listed holdings in the second quarter compared with just one in the second quarter of 2021, 13F filings to the U.S. Securities and Exchange Commission show.

HHLR is one of the largest offshore China managers and known for its heavy positions in U.S.-listed Chinese stocks. Its three top non-China holdings are customer relationship management platform provider Salesforce, food delivery firm DoorDash and gaming and e-commerce company Sea. Its top holding, comprising 19% of its portfolio in U.S.-listed stocks, is Chinese drug developer BeiGene

Hong Kong-based Aspex Management which manages more than $7 billion and focuses on pan-Asian equity, backed by Hillhouse Founder Zhang Lei, has also switched holdings. Four out of five of Aspex's top buys among U.S.-listed firms in the second quarter were non-China names, including DoorDash, semiconductor equipment supplier Lam Research, NVidia and Las Vegas Sands.

Its non-China exposure now accounts for about 31% of its top 10 U.S.-listed holdings, a significant increase from about 15% in the first quarter of 2022, or 14% in the same period last year, based on Reuters calculations according to 13F filings.

The China ADR index is down more than 60% from a peak on Feb. 16 2021, far more than Nasdaq's 17% drop for the same period.

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