Some heavyweight global investors may have timed their purchase of Chinese blue chips to perfection in the first quarter as the stock market gained momentum, while others may have missed out.
Saudi Arabia’s Public Investment Fund (PIF) and Scion Asset Management, managed by Michael Burry of The Big Short fame, increased their holdings of Chinese large caps, while Singapore’s Temasek did the opposite.
PIF scooped up over 153,500 shares of Alibaba Group Holding to bulk up its stake by 11 per cent, one of the biggest additions to its equity portfolio in the January to March quarter, according to its 13F filing on Wednesday with the US Securities and Exchange Commission. Its holdings in two other Chinese American depositary receipts, Pinduoduo and BeiGene, was unchanged from the previous quarter.
“Investors have relinquished the wait-and-watch approach [for Chinese equities] in favour of building exposure on incremental signs of easing and wiped out the underweight allocation from prior months,” Bank of America strategists including Ritesh Samadhiya said in a note on Thursday, citing a survey of 134 regional fund managers who oversee US$301 billion of assets.
Burry, who profited from shorting the US housing market in 2007-08, also added to his wagers on China’s e-commerce leaders during the first quarter. Scion boosted its stakes in Alibaba by 67 per cent to 125,000 shares, while making JD.com its top holding after boosting its stake by 80 per cent.
These moves came as both PIF and Scion substantially slimmed down their broader equity portfolios last quarter, according to their 13F filings, most likely in an attempt to cash in on the early rally in the US market.
PIF held a total of 38 stocks worth US$20.5 billion at the end of March, versus 50 stocks valued at US$35.2 billion at the end of 2023. Similarly, Scion had reported stakes in only 16 firms, from 25 in the previous quarter, as it exited positions in Amazon and Alphabet and a few others.
That might have helped them to stay the course for China’s bull run.
The MSCI China Index has surged nearly 28 per cent since a January low, restoring over US$2 trillion of value to Chinese companies listed on the mainland, in Hong Kong and New York, according to Bloomberg data. Alibaba, which owns the Post, has rallied 24 per cent during the period.
Temasek’s strategy was at odds with PIF and Scion. The Singapore state-owned investment firm offloaded nearly 356,000 Alibaba shares, reducing its holdings in the e-commerce giant by 4 per cent.
The fund also completely divested the 9.6 million shares valued at US$96 million it held in Gracell Biotechnologies, a Chinese biopharmaceutical firm acquired by AstraZeneca in February, after taking a position three years ago.
The move may have been too hasty and caused it to miss out on the recent bull run.