Top China stock fund says wait for the tech rebound, if you can
LONDON: As Chinese technology stocks experience one of their toughest years in recent memory, Dawid Krige is keeping faith with the country’s beaten down equity stars.
His London-based Cederberg Capital Ltd bought more of Alibaba Group Holding Ltd and Tencent Holdings Ltd in August, stocks he once said were fit for his children’s college fund but have now slumped more than 16% since mid-June.
His long-only fund is still among the top performers investing in Greater China equities over the past year, with a 27% return through July, data compiled by Bloomberg show.
“Most of the current drivers – be it Trump and tariffs and Turkey, as well as the deleveraging – are probably more of a transient nature,” Krige said by phone on Aug 24
“But Chinese equities have never been up in a straight line and have tended to be very volatile. We think it’s a great time for longterm investors to be buying.”
Cederberg Capital, which manages about US$600mil, thrived on a strategy that encap- sulated the heady days of 2017, staking large bets on tech and consumer giants such as Alibaba, Tencent and Kweichow Moutai Co, the beneficiaries of a burgeoning middle class. That started going south this year as economic momentum cooled amid the unresolved US-China trade conflict. As of Aug 29, the fund had negative returns last month.
A question for investors now is whether this is just a blip in the wider China story, and can they stomach the volatility and sit tight.
For Krige, the answer is yes. He can afford a long-term view because his investors do. With a US$100,000 minimum investment, the fund mostly attracts institutions and wealthy families.
Even as the US-China trade war whipsaws Chinese markets, Krige said he hasn’t sold any of his holdings and has added China Foods Ltd, which he sees as a beneficiary of stateowned enterprise reforms.
As for Alibaba, whose profits dropped last quarter partly due to large investments, its future will depend on how those new businesses pan out, he said.