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Michael Burry's Bold Continuation in Chinese Tech Amid Market Turmoil
Ticker Tea
February 15, 2024
📝 SUMMARY: Michael Burry, the famed investor renowned for his prescient bet against the US housing market bubble as depicted in "The Big Short," has made another contrarian wager, this time on the tech giants of China, Alibaba Group Holding Ltd. ($BABA) and JD.com Inc. ($JD). In the latest financial maneuvers, Scion Asset Management, Burry's investment firm, upped its stake in $BABA by 50% and in $JD by 75,000 shares, making these companies its top holdings, despite a tumultuous period for Chinese equities.
This bold move comes as Chinese stocks face a severe rout, with Alibaba's shares down 5% year-to-date and JD.com experiencing a nearly 20% fall. These investments are being closely watched as global investors increasingly shy away from Chinese equities amid a lingering property crisis and decelerating economic growth. Burry's decision to bolster his positions in these companies, therefore, stands out as an assertive bet on their future recovery and growth potential.
Burry's engagement with $BABA and $JD is not new. He initially invested in these firms as China was beginning to recover from the pandemic effects but liquidated his stakes in the second quarter of 2023, only to reinvest months later. His investment strategy appears to embrace high-risk scenarios where his analysis suggests undervalued prospects.
The backdrop to Burry's investments is a broader sell-off in Chinese stocks, with foreign investors withdrawing significantly. This trend reflects a growing cautiousness among global funds towards Chinese equities, exacerbated by economic challenges and reduced investor confidence in the region.
Despite the market's downturn, Burry's actions highlight a different narrative. By increasing stakes in Alibaba and JD.com, he signals a belief in the inherent value and long-term growth prospects of these tech behemoths. His investments are a testament to his strategy of making contrarian bets, often in times of market pessimism, echoing his historic moves that have occasionally led to substantial gains.
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