Ark Invest CEO Cathie Wood has allegedly begun cutting back her fund’s exposure to China, after the communist country imposed a sweeping set of regulatory changes.
According to the Financial Times, which cited comments made by Wood during the Mizuho Securities conference, the Wall Street darling announced her fund has dramatically reduced its Chinese positions, following a series of regulatory shifts by the country’s government across the education, gaming, and tech sectors.
The Ark CEO brought attention to the Chinese government’s targeting of the online education industry, which now bans for-profit firms from teaching school subjects. The government’s measures also barred gamers under the age of 18 from playing video games during the week, and cut their screen time to just three hours during the weekend. The interventions also targeted the tech sector— most notably ride-hailing company Didi (NYSE: DIDI), which saw its shares tumble after regulators launched a sweeping investigation shortly after its US IPO.
“We have not eliminated our positions but we have reduced our positioning in China dramatically and we have swapped some of our holders, which became losers, into companies that we know are courting the government with ‘common prosperity’,” Wood explained.
Instead, Wood said her fund will invest in Chinese companies that are “currying favor” with Beijing, such as logistics company JD.Com, as well as e-commerce platform Pinduoduo, which is heavily focused on the grocery sector. Wood also noted that despite the portfolio shift, her fund will not completely give up on China, because the country’s financial sector is likely just going through a “reset.”
“We think they’ll reconsider some of these regulations with time and we won’t give up on China because they are so focused on innovation and they are so inherently entrepreneurial,” she was quoted as saying.
Information for this briefing was found via the Financial Times. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.