By Steve Goldstein
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 /zigman2/quotes/204808965/composite ARKK +2.47% sold $25 million worth of Tencent /zigman2/quotes/204605823/delayed HK:700 +2.39% 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 /zigman2/quotes/201846852/composite ARKW +1.02% 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 /zigman2/quotes/201948298/composite BABA +2.43% and ride-hailing service DiDi Global /zigman2/quotes/227703899/composite DIDI +1.59% , 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 /zigman2/quotes/210598127/delayed CN:SHCOMP +0.19% and the Hang Seng /zigman2/quotes/210598030/delayed HK:HSI +1.03% are each up 2% in 2021, compared to the 16% rise for the S&P 500 /zigman2/quotes/210599714/realtime SPX -0.91% and the 12% gain for the MSCI All-Country World index. /zigman2/quotes/210598083/delayed XX:892400 -0.71%