Qiaoshui, the world's largest hedge fund, stepped in to increase its holdings at a time when Internet stocks remain in the doldrums.

On May 13, Qiaoshui filed its position report for the first quarter of 2022 to the Securities and Exchange Commission (SEC). According to the report, Qiaoshui continued to be bullish on Chinese assets, with Chinese stocks such as BABA, Pinduoduo and Baidu, Inc. all overweight, while Tesla, Inc., who fell nearly 30 per cent this year, was sold off.

Since the beginning of this year, a number of Chinese stocks have ushered in ups and downs. In this context, many overseas asset management giants added "bottom". In addition to Qiaoshui, Fidelity International and Morgan also began to increase their holdings in Internet stocks such as JD.com and Meituan.

It is worth mentioning that investment master Munger was also optimistic about Chinese assets before, but suddenly reduced his holdings of BABA sharply in the first quarter of this year. 'you are at risk if you hold securities, 'Mr. Munger said at DailyJournal's annual meeting. Munger believes that BABA is a reasonable investment, at least for now, buying BABA stock is not as risky as it seems.

Qiaoshui continues to increase the value of Chinese assets

Qiaoshui recently released its position report for the first quarter of 2022.During the first quarter, Qiaoshui increased its holdings of BABA, Pinduoduo, Bilibili Inc., NIO Inc., Baidu, Inc. and other Chinese stocks, indicating that it is optimistic about Chinese assets.

Data show that the overall position size of Qiaoshui reached $24.807 billion in the first quarter, an increase of 44% from $17.202 billion in the previous quarter, and the concentration of the top ten heavy stocks was 33.94%. In the first quarter, it increased its holdings in the market by a total of 546, reduced its holdings by 156, built 261 new positions, and cleared 24 targets, including Tesla, Inc..

On the whole, in the context of the poor performance of the global market in the first quarter, Qiaoshui chose to increase its positions against the trend, with the proportion of positions in sectors such as health care and consumer goods expanding, while the proportion of financial-related positions decreased.

It is worth noting that in terms of the allocation of US-listed stocks, Qiaoshui continues to increase its positions, and Internet companies such as BABA, Pinduoduo and Baidu, Inc. have all increased their holdings significantly.

Data show that Qiaoshui increased its stake in BABA by 3.2122 million shares in the first quarter, an increase of 75%. After the increase, the number of shares in the position reached 7.4805 million shares, and the market value of the position reached US $814 million, ranking the sixth largest. Pinduoduo increased his holdings by 2.2775 million shares, an increase of 85%. After the increase, the number of shares reached 4.9394 million shares, with a market value of US $198 million. Baidu, Inc. increased his holdings by 376600 shares, or 50%, with a market capitalization of US $149 million after the increase.

However, JD.com reduced his position by 19%, reducing the number of shares to 519900 shares, reducing the market value of his holdings to $124 million.

With regard to the shareholding of new energy vehicles, NIO Inc. and Li Auto Inc. both greatly increased their holdings, with NIO Inc. increasing their holdings by 73% and Li Auto Inc. by 115%. However, Tesla, Inc., which is also a new energy car company, was cleared by it. Data show that Qiaoshui sold its 25500 shares in Tesla, Inc. in the first quarter and no longer holds Tesla, Inc. after the sale.

In January, RayDalio, the founder of Qiaoshui, warned that innovative technology stocks, including Tesla and Roku, were already in an extreme bubble, when the US stock market was already on the brink of a bubble, reaching 70 per cent of its peak in the late 1990s and late 1920s. Dalio highlighted other signs of a bubble, including the boom in special-purpose buy-outs and IPO, as well as a sharp increase in options trading activity.

However, in terms of Chinese assets, Qiaoshui has been adding positions for some time. BABA, which is held by Qiaoshui heavy Cang, built a new position in the second quarter of 2018 and has held it ever since. In the first quarter of 2021, Qiaoshui reduced its holdings of 33000 shares of BABA, but then continued to increase its holdings. In the first quarter of 2021, Qiaoshui again reduced its holdings of 197800 shares of BABA, but then continued to increase its holdings. After the BABA stage stabilized in the first quarter of this year, Qiaoshui substantially increased its holdings by 3.2122 million shares, setting a new record in recent years.

In addition, Qiaoshui previously released data showing that the total assets of its all-weather China fund reached $6.154 billion, an increase of about 13% from the previous period of $5.436 billion. The Qiaoshui round-the-clock China fund has a minimum starting investment of $10 million and currently has 20 investors, an increase of five investors over the previous period, with 48 per cent of the fund's assets coming from non-US investors.

Giants such as Morgan and Fidelity International are also increasing their holdings in the Internet.

Although the valuation of Internet stocks has fallen to an all-time low, the industry continues to kill in defiance of fundamentals under the influence of multiple bearishness this year. BABA, the US stock, fell as low as $73.28 and then rebounded to $124.11, but then the company's shares continued to dip, falling to around 78 yuan on May 12. BABA's share price rebounded sharply on May 13 and closed up 8.51% at $87.99.

However, after Internet stocks slashed valuations, some overseas asset management giants chose to increase their positions against the trend. In addition to Qiaoshui, overseas giants such as Morgan and Fidelity International are also increasing their holdings in the Internet recently. During March this year, Fidelity's China Consumer Power Fund significantly increased its holdings in Internet stocks such as Meituan and JD.com, according to Morningstar data.

Meituan increased his shareholding by 20.27%, and the market value of his position reached US $180 million, while JD.com increased his shareholding by 10.22%, and the market value of his position reached US $139 million.

Tencent, the first largest heavy stock in the fund, and BABA, the second largest stock, are also Internet stocks. Tencent received an increase of 4.26% of the fund's shares in March, while BABA increased his position by 0.96%.

Another Chinese equity fund owned by Fidelity International also significantly increased its holdings in the Internet during March, including BABA and Tencent. During March, Fidelity's China focus fund increased its position in BABA ADR32.29%, increasing its 82.86 per cent stake in BABA, while Tencent also increased its stake by 3.59 per cent, according to Morningstar.

JPMorgan Chase & Co's funds are also aggressively increasing their holdings in the Internet. According to Morningstar, JPMorgan Chase & Co's flagship China fund, "JPMorganFunds-ChinaFundA (acc)-USD", has a new size of US $4.963 billion. As of March 31, 2022, the top 10 heavy stocks of the fund accounted for 39%. The top ten stocks in the fund are Tencent, Meituan, China Merchants Bank, JD.com, Ping An Insurance, NetEase, Inc, Wuxi Biologics, China Overseas Land & Investment and China Resources Mixc Lifestyle Services. In March, the fund made a large increase in JD.com 's position, with a margin of 12.54 times. After increasing the position, JD.com ranks the fourth largest heavy stock, with a market capitalization of $212 million.

Financial committee: China will, as always, support enterprises to list overseas

One of the main factors affecting the trend of the Internet this year is the delisting of Chinese stocks. On January 1, 2022, the Foreign Company Accountability Act of the United States came into effect, requiring foreign companies on the identification list to strengthen information disclosure and meet the requirements of the United States Accounting Oversight Board for audit manuscript inspection; if the company fails to comply for three consecutive years, the trading of its securities on American exchanges will be prohibited.

Analysts pointed out that the impact of this incident on the company's day-to-day operations and fundamentals is limited, which will lead to significant fluctuations in the stock price in the short term, but there is more room for repair in the long run, solid fundamentals or valuation repair cornerstone.

On March 16 this year, the Financial Committee of the State Council held a special meeting to study the current situation. It is clear that it is necessary to maintain the long-term trend of the healthy development of China's economy and all parties work together to maintain the stable development of the capital market. At the same time, with regard to China-listed stocks, Chinese and US regulators have maintained good communication, made positive progress, and formed specific cooperation plans, and China will, as always, support enterprises to list overseas.