Global Statistics

Burry & Temasek Increase and Alibaba Holdings, while Dalio Sells Tech Stocks

Months after aligning their investment strategies, the world’s largest institutional investors find themselves divided on Chinese stocks. Michael Burry, renowned for his prediction of the 2008 housing crash in the United States and depicted in “The Big Short,” along with Singapore’s sovereign wealth fund Temasek, has been actively increasing their positions in Chinese stocks.

Conversely, Ray Dalio, a prominent China bull, has been reducing his exposure due to mounting geopolitical tensions. Burry’s latest 13F filing reveals a significant increase in his stake in by 233%, amounting to 250,000 shares, as well as a doubling of his bet on Alibaba Group Holding, which happens to be the parent company of this newspaper, to 100,000 shares. These two Chinese internet giants now constitute the largest holdings in Burry’s Scion Asset Management, accounting for 20% of its $107 million stock portfolio.

Temasek has also amplified its investment in by 79%, surpassing 1.6 million shares, and elevated its stake in Alibaba by 4%, reaching over 9.5 million shares. As of March 31, Temasek held a total of eight Chinese stocks worth $2.3 billion, representing a 5% increase from the previous year-end.

In contrast, Bridgewater Associates, the world’s largest hedge fund founded by Ray Dalio, a notable long-term supporter of China, continued to decrease its holdings of Chinese stocks during the January-to-March quarter. The fund completely sold off its 702,473 shares in Baidu, while significantly reducing its stakes in other companies such as PDD, Nio, and Weibo by approximately 35% to 45%.

According to Bridgewater’s latest 13F regulatory filing for the March quarter, the total value of its equity stakes in 45 US-listed Chinese companies experienced a 37% decline, amounting to $647 million.

This current shift in sentiment starkly contrasts with the positive outlook expressed just a few months ago. It comes as China’s reopening strategy faces challenges due to a slower-than-anticipated economic recovery and escalating geopolitical tensions. In the first quarter, the MSCI China Index, which tracks the performance of over 700 stocks traded in China and internationally, recorded a 5.3% increase, lagging behind the MSCI World Index’s jump of over 7.3%.

Goldman Sachs analysts, including chief Asia-Pacific strategist Timothy Moe, pointed out that investors are now recognizing that we may have reached or surpassed the peak of the recovery momentum, which could serve as a signal to reduce exposure to Chinese stocks. This observation was highlighted in a note to clients on Saturday.

Goldman Sachs has reported that global hedge funds have reduced their net purchases of Chinese stocks made in the fourth quarter of the previous year by 45%. As a result, their overall net exposure to China has decreased from 13.3% in January to 10.5%. This decline indicates a cautious approach taken by hedge funds towards Chinese stocks in recent months.

“The recovery momentum fading is not good for boosting investor confidence at this stage,” said Willer Chen, a senior analyst at Forsyth Barr Asia. Whether the markets will see another bullish chorus in the future really depends on the level of consumption recovery in China, he added.

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