Ray Dalio’s Bridgewater cut 10 Chinese stocks including Xpeng, TSMC amid third-quarter exodus by hedge funds

Name: Biden’s China tech policy goal: a 10 year handicap
Uploaded: 2023-11-14T06:02:56.000Z
Duration: 27 min 21 s
Description: Biden’s China tech policy goal: a 10 year handicap

Bridgewater, the world’s largest hedge fund, has scaled back its positions in Chinese companies, shrinking its holdings by 60 per cent since September 2022

Dalio expects a ‘more behind-the-scenes, Cold War-style great power conflict’ between China and US

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A Xpeng assembling line in Zhaoqing, Guangdong province. Bridgewater has completely sold off its holdings in Xpeng and Li Auto, and reduced its depositary shares in Nio. Photo: Xinhua

Jiaxing Li

Published: 2:02pm, 14 Nov 2023Updated: 5:23pm, 14 Nov 2023

Bridgewater Associates pruned its bets on Chinese stocks last quarter to join a record exodus of global funds from the market this year as China’s economic recovery falters. It also exited Taiwan Semiconductor Manufacturing Company (TSMC) amid the US-China tech war.

Bridgewater, the world’s biggest hedge fund, trimmed its holdings of US-listed Chinese stocks during the three months ending on September 30 by completely getting out of 10 stocks, including electric vehicle (EV) makers Xpeng and Li Auto and biopharma players HutchMed and BeiGene, according to its latest 13F filing overnight in New York.

The money manager, founded by China bull Ray Dalio, also reduced its depositary shares in 16 other stocks, including EV maker Nio, Pinduoduo e-commerce platform owner PDD Holdings, online lender Lufax Holdings, fast-food chain Yum China, hotel operator H Group and travel operator Trip.com.

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Biden’s China tech policy goal: a 10 year handicap

Bridgewater sold its remaining shares in chip maker TSMC and its US peer, Micron, before the global tech war worsened with a lawsuit in the US. It also cut its stake in Sea Ltd, as the Singapore-based e-commerce group struggled to grow its business and withdrew from some unprofitable markets.

“China is in the midst of a secular deleveraging that is likely to take many years to work through,” the hedge fund said in a September 30 report. “At the same time … domestic and international political risks have risen markedly. “Overall, growth remains weaker than desired, as the debt overhang in the property sector remains a significant drag.”

Founder Ray Dalio talks during the Plenary Session of the Global Economy Outlook during the China Development Forum in Beijing on March 25, 2023. Photo: EPA-EFE

The hedge fund’s pullback in New York extends its retreat from China, which started in June last year as returns sagged. The US Federal Reserve tightened while China eased policies without resorting to a stimulus “bazooka”. The MSCI China Index fell 3 per cent in the third quarter, while the Nasdaq Golden Dragon Index advanced 1.6 per cent.

Global funds pulled US$10.9 billion from China’s onshore market in the third quarter, and have withdrawn another US$6.2 billion since September 30, Goldman Sachs said citing Stock Connect data. Between June 30 and September 30, global hedge funds cut their net allocation in China to 8.1 per cent from 8.7 per cent, it added.

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Reports over the past month have shown that manufacturing in China unexpectedly shrank and credit growth was underwhelming, while the country’s housing slump persisted.

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