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: Ark’s Cathie Wood seems to have thrown in the towel on China


“From a valuation point of view, these stocks have come down and again from a valuation point of view, probably will remain down.”

— Ark Investment Management CEO Cathie Wood

Ark Investment Management CEO Cathie Wood is seemingly throwing in the towel on Chinese internet stocks. In monthly remarks, Wood discussed a “valuation reset,” according to Bloomberg News.

Ark has put its money where its mouth is. On Tuesday, the Ark Innovation ETF

sold $25 million worth of Tencent

stock, continuing a selling spree in the stock that has brought its holding in the Chinese internet company down to 0.1% of the portfolio. On Bloomberg’s calculations, the weighting of China in that fund is now less than 1% from 8% in February, and the weighting of China in the Ark Next Generation Internet ETF

is the lowest since at least 2014.

Tencent did get a rare bit of good news after its proposed takeover of search engine developer Sogou was approved by China’s antitrust regulator. But China has taken a range of measures against local tech companies including tech conglomerate Alibaba

and ride-hailing service DiDi Global
in areas including competition, data privacy and financial services.

As a result, Chinese stocks have been one of the worst performers globally this year. The Shanghai Composite

and the Hang Seng

are each up 2% in 2021, compared to the 16% rise for the S&P 500

and the 12% gain for the MSCI All-Country World index.

FA Center: If you think stocks and housing are in a bubble, check out bonds

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