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BetaShares Technology Tigers ETF (ASIA) $10.50

The sentiment hit to China domiciled tech as opposed to those in the US has been huge over the last 24-hours with Alibaba (BABA) for example falling -7% last night, this group of stocks have now endured their worst 2-day crunch since the GFC as Beijing’s sweeping crackdown across tech and education has decimated investor sentiment, unfortunately our initial foray into the space 10-days ago looked well timed for a few days’ time but now we must decide if it was too early or simply wrong, at this stage I’m leaning towards the later believing the half-size 5% investment would be better positioned in a resources facing ETF.

The underlying message is clear and disturbing for investors i.e. China is putting its political goals firmly in front of shareholders. Who knows what comes next but its hard to imagine it proving positive for equities hence the weakness reverberating through sectors such as property management and online food platforms looks likely to be ongoing. Lurking on the horizon we also have the huge threat of the US forcing Chinese companies to delist if they don’t disclose suitable financial information to regulators making it extremely hard to currently quantify the risks associated with any stocks that are China facing. Just when you think ‘China Risk’ is adequately priced it rips up another gear.  Other stocks also come to mind including our local position the  in a2 Milk (A2M) and even Crown (CWN) which would certainly miss the Chinese gamblers if they don’t return after COVID.

MM is now evaluating our offshore holdings in Tencent (700 HK), Alibaba (BABA US) and JD.com (JD US) – subscribers should expect at least one of these holdings to be cut. MM often considers new fuelled sell-offs in stocks as buying opportunities but when it comes to China’s policy, history tells us there’s no hurry to catch the proverbial falling knife – the risk / reward is simply too hard to quantify making it unattractive to MM.

MM is reconsidering our 5% holding in the ASIA ETF
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BetaShares Technology Tigers ETF (ASIA)
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