Big hedge funds soured on Chinese stocks in the second quarter as Beijing’s regulatory crackdown across the private sector ramped up.
But they loaded up on new IPO stock and Chinese ride-hailing giant Didi Global (DIDI), the latest hedge funds’ 13F filings show.
The latest filings come after Cathie Wood has disclosed that her ETFs have been steadily unloading Chinese stocks. On Monday, her ARK Fintech Innovation ETF (ARKF) revealed more sales of Tencent (TCEHY) and Alibaba (BABA).
In Q2, George Soros’ Soros Fund Management dumped many of its U.S.-listed Chinese stocks, including Baidu (BIDU), Vipshop (VIPS), Tencent Music Entertainment (TME) and IQiyi (IQ). But it picked up 2.7 million shares of DIDI stock, worth more than $38 million as of June 30.
Activist investor Dan Loeb of Third Point slashed a JD.com (JD) stake by 12%, or 400,000 shares. But he picked up 13 million shares of Didi, worth nearly $185 million.
Chase Coleman’s Tiger Global Management trimmed JD.com and Alibaba, while slashing New Oriental Education (EDU) and TAL Education (TAL) by 50% and 60%, respectively. The after-school tutoring stocks collapsed last month as Beijing sought to change their business models to nonprofit.
But the Tiger fund bought 2 million shares of DIDI stock, worth $28.2 million, and retained a $1.79 billion stake in Pinduoduo (PDD).
David Tepper’s Appaloosa Management exited Baidu and IQiyi, while slashing Alibaba almost in half.
D1 Capital Partners, run by Dan Sundheim, sold its 25 million shares in New Oriental Education, while Eric Mandelblatt’s Soroban Capital exited a massive stake in Alibaba, according to the latest 13F filings.
Didi lost 0.5% to 8.06 on the stock market today. That is below its IPO price of $14 amid China’s expanding crackdown. The China ride-hailing giant debuted on the stock market June 30, the last day of Q2 and right before the crackdown began in earnest.
Alibaba, Baidu, Tencent and JD.com lost nearly 3% to 4% each on Tuesday. TME stock sank 13%.
Chinese stocks came under further pressure Tuesday, when the country’s market regulator issued draft rules banning unfair competition on the internet.
And on Monday, SEC Chair Gary Gensler also gave a stark warning about the risks of investing in Chinese stocks.
Last week, China stocks sold off after the Communist Party’s Central Committee released a new five-year plan that calls for greater regulation across a broad scope of businesses and the economy.
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