BlackRock trims Alibaba, Tencent, Meituan on ‘ongoing’ China tech crackdown and valuation risks, adds financials, energy in reflation bets

BlackRock has reduced its holdings in Chinese technology stocks over the past three quarters, and added banks in economic reflation bets

The world’s largest fund manager is still positive on Chinese stocks because of recovery upside, ready to add tech on better valuations

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BlackRock China Fund has been trimming its bets on Chinese tech stocks, manager Lucy Liu says. Photo: Bloomberg

Published: 7:45am, 22 Apr 2021Updated: 9:26am, 22 Apr 2021

BlackRock, the world’s biggest money manager, has trimmed its holdings of Chinese technology stocks over the past three quarters because of “ongoing” regulatory tightening, while scooping up stocks that stand to benefit from a global economic recovery.

A months-long antitrust investigation into e-commerce industry practices led to a record US$2.8 billion fine on Alibaba Group Holding this month, stoking concerns more companies could be hauled up. Many of the 34 sector leaders have pledged to comply after being summoned for a meeting on April 13.

The internet-related sector is growing too fast and is likely to be reined in to ensure a healthy pace of expansion, according to Lucy Liu, a money manager at BlackRock, the New York-based fund management giant with US$8.7 trillion in assets globally.

“Whether it’s over yet? Probably not,” she said during a webcast presentation on Wednesday. “I think it will very much be on an ongoing basis. The sector is growing too fast and strong after the pandemic. It’s taking shares from the whole society.”

Lucy Liu, manager of US$1.64 billion BlackRock China Fund. Photo: BlackRock handout

The sector’s grip on the economy and reach in society are likely to lead to heightened scrutiny from policymakers with a view of regulating the sector, in the bigger context of regulation in many other industries. The move, Liu said, was to ensure they can still continue to grow healthily.

Liu has trimmed her bets on technology stocks since the second half of last year in the US$1.64 billion BlackRock China Fund under her management since May 2019, saying that increased competition and stretched valuations had also chipped away at their investing appeal.