Famed hedge fund manager Michael Burry, known for his pivotal role in the 2008 financial crisis as depicted in “The Big Short,” is currently riding a wave of success with his significant investments in the Chinese stock market. In a remarkable turn of events, Burry’s Scion Asset Management, which oversees approximately $200 million, has allocated nearly half of its portfolio to major Chinese tech firms, capitalizing on a recent surge in their stock prices.
Burry’s investment strategy focuses heavily on three key players in the Chinese tech sector: Alibaba, Baidu, and JD.com. As per his latest 13F filings, Alibaba alone constitutes 21% of his portfolio, with Burry recently increasing his stake by 24%. Baidu and JD.com also make substantial contributions, each representing 12% of his investments. This bold commitment has positioned Burry to benefit directly from China’s aggressive economic stimulus measures, including interest rate cuts and liquidity support, aimed at revitalizing a sluggish economy.
This week, the Chinese stock market has been significantly buoyed by policy announcements intended to stimulate growth. The People’s Bank of China has implemented crucial interest rate reductions and adjusted reserve requirements, encouraging banks to boost lending. Moreover, China’s government has actively encouraged companies to initiate stock buybacks, fostering a more robust investment climate. As a result, the iShares MSCI China ETF has surged by an astonishing 18% this week, with market leaders Alibaba, Baidu, and JD.com witnessing stock gains of 19%, 18%, and an impressive 32%, respectively.
Burry’s initial foray into Chinese stocks began in earnest in late 2022, and his patience is now paying off handsomely. Analysts, such as those at HedgeFollow, have noted that his average purchase price for Alibaba shares stands at $78.83. With Alibaba’s stock rising to around $105.25, Burry is poised to realize substantial gains, assuming he has maintained his positions since the last 13F filing ended on June 30.
Burry isn’t alone in his bullishness towards Chinese equities. Billionaire investor David Tepper has also voiced confidence in the market, advising that this is a prime moment to buy into Chinese stocks. His fund has notably invested around 12% in Alibaba, echoing Burry’s sentiments regarding the strong growth potential of these companies due to their relatively low price-to-earnings ratios combined with impressive growth rates.
In summary, the financial strategies of prominent investors like Michael Burry highlight a growing optimism in the Chinese stock market. As the world watches how these investments play out amidst an evolving economic landscape, Burry’s substantial stake represents both a calculated risk and a testament to his enduring acumen as an investor. As further stimuli roll out in China, these investments could prove to be a significant pivot point for Burry and other market players seeking opportunities in emerging markets.