Asia hedge funds scoop up Alibaba, Sea after stock rout

The number of Alibaba shares held by the Asia-focused funds increased 311% during the period, while that of Sea jumped by 110%. That’s based on the analysis of the 13F filings of 15 Asian asset managers — including hedge funds Aspex Management and Oasis Management Co. — that had at least $200 million in quarter-end holdings.

The choppy markets put Asia’s hedge funds to the test. A Nasdaq gauge with heavy exposure to Chinese technology firms has slumped nearly 67% since a February 2021 peak, as the regulatory crackdowns and geopolitical tensions spooked investors.

The 13F filings, a quarterly report of US-listed holdings by money managers, provide a snapshot of the quarter-end positions of Asia’s largest funds, albeit offering less insight than for their their US peers that have more of their holdings in New York.

A growing number of Chinese technology firms are now also listed in Asia, and the switch from US-listed to Asia-traded shares may explain some of the position changes. US-listed Asian companies tend to concentrate in the technology and health-care industries, meaning the filings may give a biased picture of the funds’ industry exposure. The filings also don’t reveal short-selling activities or timing of the trades.

The following charts give some overview of their quarter-end holdings.

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Big wagers: Ecommerce, delivery, solar energy companies, and electric vehicle makers made up the funds’ 20 largest combined holdings by market value at the end of June.

While JD.com Inc. topped the chart, Alibaba represented the biggest percentage increase in combined positions, measured in number of shares, from the previous quarter.

Alibaba’s US shares have slumped 72% since October 2020. Sea is down 82% from a high in October 2021.

Bloomberg

The semiconductor trade is losing luster, with some of the Asian funds selling Advanced Micro Devices Inc., the second-largest maker of chips that run computers, Nvidia Corp., and Taiwan Semiconductor Manufacturing Co.

The semiconductor industry is bracing for what could become the worst decline in a decade or more, due to a downturn in demand for consumer electronics.

Hermes Li’s Hong Kong-based Aspex, which managed $8 billion earlier this year, went the other direction. His fund bought Nvidia and TSMC shares in the quarter, before TSMC raised its 2022 revenue forecast and said it would cut spending on expansion in mid-July.

Crowded trades: Meal and express delivery, semiconductors, e-commerce, electric vehicle and online brokerages were among the most crowded trades.

Bloomberg

Doubling down: Seven managers kept or added to their positions in Chinese online property platform operator KE Holdings Inc., whose US-traded shares jumped 45% in the quarter.

Bloomberg

Trimming down: Nvidia and TSMC were reduced by the biggest number of funds in the three months through June, joining Alphabet Inc. and Microsoft Corp. in the global tech rout.

Bloomberg

Some funds remained skeptical about the outlook of Chinese e-commerce companies, leading to cut backs in Alibaba and JD.com.

Aspex, CoreView Capital Management Ltd., Oasis Management Co., Ovata Capital Management Ltd., Perseverance Asset Management declined to comment.

HHLR Advisors Ltd., SeaTown Holdings, FengHe Fund Management, Franchise Capital Management Ltd., Greenwoods Asset Management Hong Kong Ltd., MY.Alpha Management HK Advisors Ltd., Oxbow Capital Management (HK) Ltd. didn’t respond to emails seeking comment.