Chopped Wood
Renowned tech investor Cathie Wood has made a significant move in response to China’s economic slowdown, announcing that her flagship ARK Innovation ETF has eliminated its exposure to the developing market. Managing nearly $9 billion in assets, the fund has divested from Chinese revenue-generating stocks, opting instead to concentrate on Wood’s favoured bets, including Tesla, Coinbase, Roku, and Zoom, during the market downturn. In a prerecorded investor webinar, Wood explained the rationale behind the decision, citing her initial interest in China due to its impressive response to the Covid pandemic with disciplined fiscal and monetary policies. However, her stance shifted when Beijing began tightening its grip on the economy, particularly targeting the ultrawealthy and tech sector. Wood expressed particular concern about China’s real estate market, which has accumulated massive debt after years of rapid expansion. As a result, ARK Innovation ETF no longer holds shares in Chinese tech giant Tencent and property site KE Holdings. Only a small stake in Chinese e-commerce firm JD.com remains, while other names like Pinduoduo and Tencent have been sold off. However, Wood hasn’t ruled out the possibility of reevaluating China-related investments once the country emerges from its challenging period and enters a new bull cycle.
Despite the China divestment, Wood’s flagship fund has had an impressive year, bouncing back from sharp losses caused by rising interest rates. With ARKK up over 50% in 2023, Wood’s high-conviction approach seems to be paying off, even amidst a tumultuous global economic landscape. As investors continue to navigate uncertain market conditions, Wood’s strategic moves and her anticipated return to China-related investments may provide valuable insights for those seeking growth opportunities in the ever-evolving financial landscape. What do you think about Cathie Wood’s moves? And what will happen with the ARKK ETF going forward?
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
