Tiger Global Management is pulling back new investments in Chinese equities as it reviews exposure to the country.
According to the Wall Street Journal, the New York-based investing powerhouse watches Beijing’s tendency to heighten geopolitical tensions and continue its stringent zero-COVID policy.
People familiar with the money manager believe Tiger is waiting for a better vision of China’s intention to boost economic growth and its potential plan for Taiwan. Tiger’s billionaire founder, Chase Coleman, expects that Beijing will have to make moves to stimulate economic growth eventually.
Until the next public statement from China’s leader Xi Jinping, the firm is redirecting its focus on India and Southeast Asia.
Sources say the fund group has significantly cut back on new bets in private companies since Beijing stepped up its tech crackdown last summer. Instead, Tiger has been concentrating on a smaller number of firms it can trust. Ahead of the 20th National Party Congress in October, the company’s portfolio in China shrank from the mid-teens to the mid-single digits.
Most of Tiger’s remaining exposure to China in its hedge fund comprises JD.com and the food delivery service Meituan. However, sources told Bloomberg that even those holdings have decreased.
Tiger’s hedge fund has recently been among the worst performers in the sector, witnessing years’ worth of gains evaporate in just months. The company lost 7% in 2021. And through May this year, the loss ballooned to 52% as China’s tech stocks kept falling.
Sources said Tiger’s exposure to China has added to the losses, but it was less significant percentage-wise than the other portfolios.
Tiger is only the latest to join the money manager’s China exodus. As Bloomberg provides, Prosus NV, Warren Buffett’s Berkshire Hathaway Incorporated, and Japan’s SoftBank Group Corporation have all reduced shares in certain stocks. Additionally, pension funds in Texas and Florida are either reducing allocations or halting new investments.
The Hang Seng China index of Hong Kong has lost 34% so far this year. This marks the poorest return among the 92 global benchmarks tracked by Bloomberg.