Asia’s Hedge Funds Beat Alibaba, Sea After Rout

(Bloomberg) — Some of Asia’s largest mutual funds more than doubled their positions in Alibaba Group Holding Ltd. and Sea Ltd. in the second quarter after a one-year hiatus.

Most Read by Bloomberg

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

Volatile markets tested Asian hedge funds. A Nasdaq index with heavy exposure to Chinese tech companies has fallen nearly 67% since its February 2021 peak as regulatory crackdowns and geopolitical tensions spooked investors.

The 13F filings, a quarterly report of U.S.-listed stocks by fund managers, provide a snapshot of the quarter-end positions of Asia’s biggest mutual funds, though they offer less insight than their U.S. peers that they have more of their shares in New York.

A growing number of Chinese technology companies are now listed in Asia, and the shift from US-listed stocks to Asian-traded stocks may explain some of the changes in position. U.S.-listed Asian companies tend to be concentrated in the technology and health care industries, meaning the filings may give a biased picture of the mutual funds’ industry exposure. The filings also do not reveal short selling activities or the timing of trades.

The charts below give some overview of their end-of-quarter holdings.

Big Bets:

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

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

Alibaba US shares are down 72% since October 2020. Sea is down 82% from its October 2021 high.

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

The semiconductor industry is bracing for its worst decline in a decade or more as demand for consumer electronics slumps.

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

Crowded Transactions:

Meal delivery and express delivery, semiconductors, e-commerce, electric vehicles and online brokers were among the busiest trades.

Doubling:

Seven managers held or added to their positions in Chinese online real estate platform operator KE Holdings Inc., whose U.S.-traded shares jumped 45% in the quarter.

Cut:

Nvidia and TSMC dropped the most funds in the three months to June, joining Alphabet Inc. and Microsoft Corp. in the global technological course.

Some funds remained cautious about the outlook for Chinese e-commerce companies, leading to cuts in 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. did not respond to emails seeking comment.

Most Read by Bloomberg Businessweek

©2022 Bloomberg LP

Leave a Reply

Your email address will not be published.