Alibaba’s key backer Temasek trims stake, adds rivals JD.com and Pinduoduo in portfolio tweak

Temasek Holdings trimmed its stake in Alibaba Group Holding last quarter while the stock slumped to new lows, and added Chinese e-c0mmerce rivals Pinduoduo and JD.com to its portfolio, according to its latest 13F filing.

The Singapore state investment firm cut its holding in Alibaba’s American depositary shares (ADS) by US$361.6 million to US$1.08 billion as the Hangzhou-based company’s value shrank by US$114 billion that quarter over concerns about regulatory crackdown in mainland China.

Temasek created a new position in JD.com worth US$12.2 million and raised its stake in Pinduoduo by US$121 million in the US market, according to the Securities and Exchange Commission filing late Monday.

Chinese stocks in overseas markets suffered an extended beating last quarter, as a crackdown on internet-platform operators since late June erased US$1.3 trillion in market value from MSCI China, an index tracking 740 firms worth US$2.5 trillion. The gauge slid 6.1 per cent last quarter following a 19 per cent rout in the third quarter.

Alibaba’s ADS slumped 20 per cent in the fourth quarter to as low as US$108.70 on December 3, a level not seen since April 2017. In Hong Kong, its ordinary shares hit an all-time low of HK$109.20 on December 30.

Temasek bet on Chinese education stocks, Didi Global before July sell-off

While China’s efforts to address the power of internet platforms, data privacy and income inequality are common around the world, the way that is being implemented in China “is a little more blunt and quick, and that is why it has created a lot of shocks out there,” according to Rohit Sipahimalani, Temasek’s chief investment strategist.

“Now in that space, I would say I would expect in the next few months to have regulatory clarity, and that would shape some winners and losers out there,” he said, according to a November interview transcript posted on its website. “We will probably wait to deploy more capital till we have more regulatory clarity.”

Temasek declined to comment on specific trades, changes are part of “usual course of business” to rebalance its portfolio from time to time, it said in an email reply to the Post.

Temasek had about 27 per cent of its assets invested in China as of last March. China remains Temasek’s largest allocation by geography outside its home base in Singapore.

Temasek retained its position in ride-hailing firm Didi Global, disclosing a US$466 million stake following the Chinese firm’s New York listing in late June. It exited Tencent Music Entertainment as China hardened its stance on music streaming.

Outside the mainland China markets, Temasek bought a small stake in Robinhood Markets and exited from Uber Technologies and the cryptocurrency exchange platform Coinbase Global, among other notable tweaks to its bets last quarter.

The changes came as louder bullish calls for Chinese stocks emerged in late October, with analysts from UBS to BlackRock calling for stronger monetary easing measures to counter an economic slowdown.

What BNP Paribas, Haitong, Schroders say about Hong Kong stock market

“Additional regulatory drags are unlikely this year, as implementation of existing rules has become the focal point, rather than introducing aggressive new measures,” Morgan Stanley said in a note to clients last week, adding that Beijing has adopted a more supportive tone on internet giants.

Temasek’s 13F filing revealed at least 10 Chinese companies in its portfolio, which included a higher stake in pharmaceutical firm Beigene and a new position in I-Mab Biopharma.

In all, Temasek listed holdings in 95 companies with a combined market value of US$27.7 billion on December 31, expanding its portfolio from 92 companies worth US$28.6 billion three months earlier. They represented a small portion of the S$381 billion (US$283 billion) of assets it managed on March 31.