Chinese Fund Manager Bets Big on Alibaba, Signaling Renewed Confidence in China’s Tech and Consumer Sectors
In a move that signals renewed confidence in China’s technology and consumer sectors, prominent fund manager Zhang Kun has significantly increased his stake in Alibaba Group Holding (BABA). This strategic investment marks Alibaba as the second-largest holding in his $8.5 billion portfolio, highlighting the growing investor interest in these sectors following a period of underperformance.
Zhang, who manages the E Fund Blue Chip Selected Mixed Fund at Guangzhou-based E Fund Management, acquired 40.4 million Hong Kong-listed Alibaba shares, representing 9.1% of the fund’s assets. This decision was likely driven by the recent rebound in Alibaba’s stock price, which soared 56% in Hong Kong during the third quarter, and the company’s enticing dividend yields.
Zhang’s move comes ahead of Alibaba’s second-quarter results announcement on November 15th and the Singles Day shopping festival, a major event for the Chinese e-commerce giant. The investor likely sees strong potential for further growth in Alibaba’s performance, particularly in light of the recent positive developments in China’s economic landscape.
This investment trend is not isolated. The broader market has shown a renewed interest in Chinese tech and consumer stocks, fueled by recent economic stimulus measures implemented by the Chinese government. These measures include a 800 billion yuan stock support package, relaxed property restrictions, and ongoing monetary easing.
China’s central bank has taken several steps to boost liquidity, injecting 700 billion yuan ($98.36 billion) into the banking system via a one-year medium-term lending facility and holding the key policy rate steady at 2.0%. The central bank also boosted liquidity with 292.6 billion yuan through a seven-day reverse repo at a fixed rate of 1.5%.
These efforts, coupled with previous rate cuts and lowered reserve requirements, are aimed at stimulating economic growth and supporting crucial sectors like real estate. This proactive approach has already yielded results, with China’s commercial banks cutting benchmark lending rates by 25 basis points to support the property sector.
The IMF recently revised its growth forecast for China in 2024 to 4.8%. However, with the government’s recent economic boosts, UBS and Goldman Sachs expect growth to be closer to 5%. This optimistic outlook further strengthens the case for investments in Chinese companies, particularly those in the technology and consumer sectors, which are poised to benefit from a robust economic recovery.
BABA stock is currently up 3.09% at $100.43, reflecting the market’s positive response to Zhang Kun’s investment and the broader positive sentiment surrounding China’s economic outlook. The stock’s recent performance and Zhang’s bold move are likely to further fuel interest in Chinese technology and consumer stocks, signaling a potential shift in investor sentiment towards the Chinese market.
