US hedge funds stampede out of China in Q2

NEW YORK, Aug 14 – US-based hedge fund investors including Coatue, D1 Capital and Tiger Global cut their exposure to Chinese companies in the second quarter, as the country’s economic prospects seemed to wobble and geopolitical tension increased.

Tiger Global slashed its position in JD.com by roughly 12%, to USD 719.3 million from USD 1.1 billion, while also reducing its number of shares in Kanzhun.

Coatue Management LLC, founded by Philippe Laffont, formerly of Tiger Management, cut its positions in Alibaba, Baidu, JD.com, Kanzhun, KE Holdings, Li Auto, and PDD Holdings, regulatory filings showed.

The hedge fund slashed its position in Alibaba by roughly 90% from March to June, filings showed.

D1 Capital Partners also dumped all its 1.7 million shares – or USD 176.8 million – in Alibaba, according to documents.

Louis Bacon’s Moore Capital Management sold over USD 200 million in shares of Alibaba, exiting its position in the company.

Michael Burry’s Scion Asset Management sold small positions it had in both Alibaba and JD.com.

The funds did not immediately respond to requests for comment.

Every quarter, institutional investors have to disclose their equity positions in so-called 13-F filings, but they do not provide any explanation for the positioning changes.

Although they are backward-looking, many investors scour them for trends.

The changes came as hopes for a post-COVID surge in growth deflated as data has shown an uneven recovery, while US-China geopolitical tensions also raised concern.

Worries have heated up in recent days, as the country’s largest private real estate developer, Country Garden, seeks to delay payment on a private onshore bond.

Meanwhile, last week US President Joe Biden announced an executive order to prohibit some US technology investments in China, sparking concerns among fund managers.

Amid those uncertainties, China-focused mutual funds also suffered a net outflow of USD 674 million in the second quarter.

At the end of July, hedge funds’ exposure to China was well below five-year averages, Goldman Sachs showed.

(Reporting by Carolina Mandl, in New York; Editing by Alison Williams and Cynthia Osterman)