Bridgewater, BlackRock, top US institutional investors ramp up bets on China - P...

Bridgewater, BlackRock, top US institutional investors ramp up bets on China

Bridgewater, BlackRock, top US institutional investors ramp up bets on China

Rebbeca Ren

posted on February 18, 2022 4:45 am

China, though underperformed last year, could be a safe play for institutional investors this year for a variety of reasons

Despite the poor performance of Chinese stocks in 2021, several institutional investors in the US have raised their holdings in Chinese companies since the fourth quarter of last year, betting on a future resurgence.

According to BlackRock's latest 13-F filing with the Securities and Exchange Commission (SEC), it had 6,394,268 shares of Alibaba as of December 31, 2021, up 116.68% from the previous quarter. 

Bridgewater Associates raised its bets on Chinese companies in the fourth quarter as well. The world's top-tier hedge fund increased its stake in Alibaba by 29% in the fourth quarter, making its holdings in the Chinese e-commerce and cloud computing giant the eighth largest in its portfolio.

The fund, founded by billionaire Ray Dalio, boosted its stake in China's second-largest e-commerce platform JD.com by 33%, in Chinese e-tailer Pinduoduoby 38%, in Chinese search engine and AI giant Baidu by 23%, and in Chinese electric vehicle maker Nio by 8% in the fourth quarter.

Bridgewater also indirectly owns several Chinese companies through its third-largest holding, Vanguard's emerging markets fund.

Charlie Munger's Daily Journal nearly doubled its holding of Chinese internet giant Alibaba shares in the fourth quarter, according to its regulatory filing. At the end of 2021, the investment company held 602,060 American depositary shares in Alibaba, up from 302,060 as of September 30, accounting for 27.65% of its total portfolio.

Charlie Munger, who also co-leads Berkshire with Warren Buffett, said in Wednesday's meeting that he sees more value in China than in the US stock market and praised the country for being a modern nation.

China's stock market has underperformed over the past year as the government tightened regulations on internet, online education, real estate and other sectors. The MSCI China index, which captures large and mid-cap representation across China A-shares, H shares, B shares, Red chips, P chips, and foreign listings, fell 23% in 2021, compared with a 27% gain for the S&P 500.

Alibaba lost nearly half of its market value in 2021, while tech giant Tencent fell 19%.

However, the worst may be over for Chinese stocks as the central bank rolled out easing measures.

China has also become “a good contrarian play” this year because the local market is entering a period of stimulus and easier policy, while the US Federal Reserve embarks on a tightening cycle, Jason Hsu, chairman and CIO of Rayliant Global Advisors, told CNBC.

Cameron Brandt, head of research at EPFR, also told CNBC that for institutional investors, in emerging markets space, China could be a safe play this year for a variety of reasons.

Goldman Sachs and Bernstein are so bullish that they have issued long studies in recent weeks endorsing mainland Chinese stocks.