China’s tepid consumer spending prompted one of the country’s biggest fund managers to aggressively cut holdings in consumption-related stocks from liquor distillers to e-commerce platforms while rotating into
artificial intelligence-linked names, abandoning years-long bets to align with the evolving dynamics of the
stock market.
Zhang Kun, the fund manager of 20.8 billion yuan (US$3.1 billion) E Fund Blue Chip Selected Mixed Fund, reduced positions in
Kweichow Moutai, Wuliangye Yibin and Luzhou Laojiao – China’s biggest
baijiu distillers – by at least 47 per cent in the second quarter, according to a comparison of quarterly portfolio reports. He also trimmed
Alibaba Group Holding by 75 per cent in the period, the data showed.
The rebalancing represents a buckling by Zhang, a stalwart who maintained consumer stocks as his key holdings for years, often touting the sector’s resilience even as consumption cratered amid a worsening job market and falling property prices. The latest economic data showed that
retail sales remained sluggish, with sales of high-end
baijiu plunging on falling demand and online shopping stalling because of reduced subsidies from e-commerce platforms. Zhang had
doubled down on his baijiu positions in the first quarter.
“Judging from the data on retail sales and employment, the downside pressure on the economy has exceeded expectations,” Zhang said in his fund’s report this week. “Households are turning more cautious about future expectations. Excessive household savings have kept rising to cope with the uncertainty arising from employment.”
In the April-to-June period, Zhang cut holdings of Kweichow Moutai to 968,500 shares, a decrease of 47 per cent from the preceding three-month period, while paring positions in Wuliangye by 71 per cent to 7.53 million shares and in Luzhou Laojiao by 52 per cent to 12.18 million shares, according to the report. Zhang held 5.78 million Hong Kong-traded shares in Alibaba as of the end of June, compared with 23.5 million in the first quarter.
