Cathie Wood’s Ark Invest has reduced its exposure to Chinese-generation stocks as a component of an ongoing regulatory crackdown, according to Ark updates.
Ark Disruptive Innovation’s flagship ETF saw its exposure to Chinese stocks drop to less than 1% from a high of 8% in February, according to knowledge compiled via Bloomberg. Ark’s exposure to Chinese generation stocks is at its lowest point since 2014.
Over the following week, the thematic investment manager will have 3 million shares of HUYA, one million shares of Tencent and more than 600,000 shares of JD. com.
In a webinar with investors on Tuesday, Wood said, “From a valuation perspective, those stocks have fallen and again, from a valuation perspective, they are likely to remain low. “
The reinstatement of valuation is transparent in the existing price-to-earnings ratio of Chinese tech giants Alibaba, Baidu and JD. com.
According to FactSet data, Alibaba’s existing P / E ratio of 19x is well below its old P / E ratio of 24x. Baidu’s existing P / E ratio of 16x is below its old P / E of 21x, and JD. com has noted its valuation. reduced by almost half, with its existing P / E of 36x a decrease than its old P / E of 62x.
Since peaking in February, Chinese-generation stocks have lost more than $500 billion in market value.
Ark’s disruptive innovation ETF is solid in Wednesday morning trading and is down 2% so far this year.