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: Ark’s Cathie Wood seems to have thrown in the towel on China

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“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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