"China Faces Judgment Day" Cathie Wood Withdraws All Investments in China

Known as the 'Donnamu Unni' in Korea
"Facing China's Economic Slowdown... Real Estate Especially Risky"

'Money Tree Sister' Cathie Wood, CEO of ARK Investment Management (ARKK), has effectively withdrawn from the Chinese market.

According to CNBC on the 21st (local time), Wood stated in a webinar with investors the day before, “As China faces an economic downturn, ARKK has reduced its exposure to China to zero.”

Cathie Wood, CEO of ARK Investment Management. [Photo by Yonhap News]

This means that ARKK, which manages approximately $9 billion in assets, currently holds no Chinese stocks.

In other words, her flagship exchange-traded fund (ETF), the ARK Innovation ETF (ARKK), has completely divested from China. She also added that she left Chinese stocks to consolidate her portfolio around her preferred bets such as Tesla, Coinbase, Roku, and Zoom.

ARKK previously held shares in Chinese internet giant Tencent and real estate company KE Holdings. Wood had praised China’s initial pandemic response and allocated 25% of her overall portfolio to emerging markets, including China, in 2020.

Wood said, “As is always the case in a bear market, we focused our strategy on the stocks we are most confident in, and especially since Chinese stocks exited one by one while we were concentrating, there is no investment in China in our flagship fund at least.”

She continued, “At that time, we were observing fiscal and monetary policy responses worldwide and were deeply impressed by China’s control. They did not throw money at the problem and were very disciplined in their monetary and fiscal policy responses.”

However, she said, “We changed our stance on China after it began tightening control over the ultra-wealthy and the tech sector,” adding, “We are particularly concerned about the Chinese real estate market as China carries massive debt following more than a decade of rapid expansion.”

Wood stated, “This is responsible for about 15 years of double-digit real GDP growth,” and expressed concern about problems accompanying rapid growth, saying, “Such growth can cover many sins.” She added, “Those sins are usually related to debt, and importantly, I believe China is facing judgment day in this regard, especially in the real estate sector.”

However, Wood also noted, “As China overcomes difficult times and the market enters a new bull phase, we may add stocks related to China again.”

Although the flagship ETF ARKK has completely exited China, Wood’s smaller fund, the ARK Fintech Innovation ETF (ARKF), still holds some shares in Chinese online shopping mall JD.com. However, it has fully divested from shares in Pinduoduo, Tencent, and others.

Meanwhile, Wood’s flagship fund ARKK has risen more than 50% this year.

Wood, who majored in economics at the University of Southern California (USC), is frequently mentioned among domestic ‘Seohak Gaemi’ (Korean investors in U.S. stocks) for achieving over 100% investment returns through aggressive investing in the U.S. stock market. Because her name sounds similar to “cash,” she earned the nickname “Money Tree Sister.”

This content was produced with the assistance of AI translation services.