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China stock market
BusinessBanking & Finance

From Bridgewater to Templeton, money managers warm up to unloved Chinese tech stocks

  • Hedge fund Bridgewater Associates topped up its China bets last quarter, while T. Rowe Price, PineBridge and Templeton strike a common bullish chord
  • MSCI China Index has lost 30 per cent or US$14 trillion in market value from this year’s peak in mid-February

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A giant screen displays stock exchange data in Shanghai. Bullish fund managers are once again loading up on selective stocks of Chinese companies. Photo: EPA-EFE
Cheryl HengandZhang Shidong
From Bridgewater Associates to BlackRock and Franklin Templeton, some of the world’s biggest stock investors have one thing in common when it comes to China. Valuations are cheap again to get back into the market.
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Bridgewater, the world’s biggest hedge fund with US$220 billion of assets, ploughed some US$400 million into US-listed Chinese stocks in the third quarter, the Post estimated based on its 13F filing. It held positions in 45 mostly tech-related stocks valued at US$1.7 billion.

BlackRock, with US$9 trillion of assets, has been tactically bullish on the market since September, suggesting an easing in monetary, fiscal and regulatory policies is needed to revive growth. Templeton, with US$1.55 trillion assets, said prices of internet-related stocks have reflected the impact of regulatory backlash.

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“If you believe in the China story in the long term, the phase we are at now is an opportune time to build out a portfolio of assets in China that will be a winner,” said Manraj Sekhon, Templeton’s Singapore-based chief investment officer overseeing its emerging-market equity group. “It is very clear that the Chinese authorities are still focused on growth and are not going to isolate the private sector.”

The chorus has grown louder even as losses multiplied. The MSCI China Index has tumbled 30 per cent from its peak in mid-February, erasing US$14 trillion of value along the way. Weak earnings have rattled investors, triggering multiple cuts in the price targets of the two biggest index members, Alibaba Group Holding and Tencent Holdings.

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The 739-member index trades at an average price-earnings multiple of 12.85 times based on 2022 earnings, the cheapest since the market’s last big crash in 2015, according to Bloomberg data. Dividends are forecast to yield the highest in four years.

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So far, the bullish sentiment has not quite paid off, with a new round of selldown over the past two weeks. Alibaba, the owner of this newspaper, hit an all-time low in Hong Kong.

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