Asian hedge funds withdraw Alibaba, sea after shares fall

Asian hedge funds withdraw Alibaba, sea after shares fall

(Bloomberg) — Some of Asia’s biggest funds more than doubled their holdings in Alibaba Group Holding Ltd. and Sea Ltd. in the second quarter, after a one-year defeat.

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The number of Alibaba shares held by Asia-focused funds rose 311% over the period, while Sea’s jumped 110%. This is based on analysis of the 13F filings of 15 Asian asset managers – including hedge funds Aspex Management (HK) Ltd. and Oasis Management Co. – who had at least $200 million in holdings at the end of the quarter.

Raging markets put Asian hedge funds to the test. A Nasdaq gauge with heavy exposure to Chinese tech companies has dropped nearly 67% since its February 2021 peak, as regulatory crackdowns and geopolitical tensions spook investors.

The 13F filings, a quarterly report of U.S.-listed holdings by money managers, provide a snapshot of the quarter-end positions of Asia’s largest funds, although it offers less information than for their U.S. peers that have more holdings in New York. York.

A growing number of Chinese tech companies are also listed in Asia, and the shift from US-listed stocks to Asian-traded stocks may explain some of the position shifts. US-listed Asian companies tend to focus on the technology and healthcare sectors, meaning that filings can give a biased picture of funds exposure to the sector. The records also do not reveal short selling activity or the timing of trading.

The following charts provide an overview of their quarter-end holdings.

Big Bets:

E-commerce, delivery, solar and electric vehicle manufacturers made up the funds’ top 20 combined holdings by market cap at the end of June.

While JD.com Inc. topped the chart, Alibaba accounted for the largest percentage increase in combined positions, measured in number of shares, over the previous quarter.

Alibaba US shares are down 72% since October 2020. The sea is down 82% from their October 2021 high.

The semiconductor trade is fading, with some of the Asian funds selling Advanced Micro Devices Inc., the second-largest maker of computer chips, Nvidia Corp., and Taiwan Semiconductor Manufacturing Co.

The semiconductor industry is bracing for what could turn out to be the worst decline in a decade or more due to falling demand for consumer electronics.

Hong Kong-based Hermes Li’s Aspex, which managed $8 billion earlier this year, went in the other direction. His fund bought shares in Nvidia and TSMC in the quarter, before TSMC raised its 2022 revenue forecast and said it would cut expansion spending in mid-July.

Crowded Trades:

Meal and express delivery, semiconductors, e-commerce, electric vehicle and online brokerages were among the most popular businesses.

Duplicating:

Seven managers maintained or increased their positions in Chinese online real estate platform operator KE Holdings Inc., whose US-traded shares jumped 45% in the quarter.

Cut down:

Nvidia and TSMC were reduced by the most funds in the three months to June, joining Alphabet Inc. and Microsoft Corp. on the global technology route.

Some funds remained skeptical about the prospects of Chinese e-commerce companies, leading to cuts at Alibaba and JD.com.

Aspex, CoreView Capital Management Ltd., Oasis Management Co., Ovata Capital Management Ltd., Perseverance Asset Management declined to comment.

HHLR Advisors Ltd., SeaTown Holdings, FengHe Fund Management, Franchise Capital Management Ltd., Greenwoods Asset Management Hong Kong Ltd., MY.Alpha Management HK Advisors Ltd., Oxbow Capital Management (HK) Ltd. comment.

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