“ “From a valuation point of view, these stocks have come down and again from a valuation point of view, probably will remain down.” ”
— Ark Investment Management CEO Cathie Wood
Ark Investment Management CEO Cathie Wood is seemingly throwing in the towel on Chinese internet stocks. In monthly remarks, Wood discussed a “valuation reset,” according to Bloomberg News.
Ark has put its money where its mouth is. On Tuesday, the Ark Innovation ETF ARKK, -1.98% sold $25 million worth of Tencent 700, +0.18% stock, continuing a selling spree in the stock that has brought its holding in the Chinese internet company down to 0.1% of the portfolio. On Bloomberg’s calculations, the weighting of China in that fund is now less than 1% from 8% in February, and the weighting of China in the Ark Next Generation Internet ETF ARKW, -1.10% is the lowest since at least 2014.
Tencent did get a rare bit of good news after its proposed takeover of search engine developer Sogou was approved by China’s antitrust regulator. But China has taken a range of measures against local tech companies including tech conglomerate Alibaba BABA, +1.96% and ride-hailing service DiDi Global DIDI, +11.29%, in areas including competition, data privacy and financial services.
As a result, Chinese stocks have been one of the worst performers globally this year. The Shanghai Composite SHCOMP, -1.07% and the Hang Seng HSI, -0.63% are each up 2% in 2021, compared to the 16% rise for the S&P 500 SPX, -0.35% and the 12% gain for the MSCI All-Country World index. 892400, -0.14%
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