Appaloosa Management founder David Tepper is ramping up his investments in China after Beijing rolled out unexpectedly strong stimulus measures to revive the country’s sluggish economy, according to a report by Investing.com.
The report quotes Tepper as saying that he is buying more of “everything” related to the world’s second largest economy following recent policy shifts from Chinese leaders, which came in response to signals from the US Federal Reserve.
“I expected that the Fed’s actions last week would prompt China to ease its policies, but I didn’t foresee them deploying such significant measures,” Tepper said during a CNBC interview on Thursday.
Throughout the second quarter, Tepper’s hedge fund retained most of its holdings in Chinese companies, despite trimming positions in giants like Alibaba and several US tech firms. With Beijing now committed to providing more fiscal support and stabilising the property market, Tepper has decided to increase his exposure to Chinese stocks, including companies like Alibaba and Baidu Inc.
“We’ve added more Chinese stocks,” Tepper confirmed, citing the attractive low valuations as a key factor, even after recent price surges.
Tepper’s comments follow a strong rally in China’s onshore equity market, with the Shanghai Shenzhen CSI 300 index jumping 14% this week, its biggest weekly gain since the global financial crisis. The NASDAQ Golden Dragon China index meanwhile, which tracks US-listed Chinese companies, surged 19% over the same period.
Prior to this week’s rally, Tepper and Michael Burry of Scion Asset Management were among the few notable hedge fund managers who remained bullish on Chinese stocks.
Tepper noted that he has relaxed some of his previous limits on Chinese stock investments. “I used to cap my exposure at 10% or 15%, but that’s probably not true anymore,” he stated, though he added that he might reassess those limits if the market experiences a pullback.
Tepper’s optimism on China is shared by other investors. Nick Wilcox of Man Group Plc told Bloomberg earlier this week that he expects Chinese stocks to continue their upward momentum, driven by ongoing policy support, improved earnings, and the Federal Reserve’s recent actions, which have created more room for China to cut interest rates.
Goldman Sachs’ prime brokerage also reported a surge in hedge funds buying Chinese equities on Tuesday, while Morgan Stanley strategists project that the CSI 300 Index could rise another 10% in the near future.
