GQG Fund That Exited China Internet Stocks Is Making a Comeback

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A top-performing emerging-market stock fund that sold off its China internet holdings last year is slowly rebuilding the exposure, citing improved tech earnings and Beijing’s friendlier policy toward private enterprise as reasons.

The $13.7 billion GQG Partners Emerging Markets Equity Fund began adding positions in Chinese platform companies in the second quarter this year and has raised the country’s weighting in its portfolio to mid-teens, according to Sudarshan Murthy, one of its portfolio managers. The weighting was about 12% at the end of June. That’s versus less than 11% as of March 31, according to data compiled by Bloomberg.

GQG Partners’ investments have become a talking point in equity markets this year owing to the bullish bets it has made on shares of India’s Adani Group — the embattled power-to-port conglomerate that saw an unprecedented rout after being rocked by a scathing short-seller report in January. The EM fund, one of the world’s biggest, has beaten 97% of its peers this year partly due to its thin exposure to China.

The tech sector though has witnessed some silver linings in recent days, with behemoths from Alibaba Group Holding Ltd. to Baidu Inc. reporting consensus-beating earnings. Forward profit estimates for gaming bellwether Tencent Holdings Ltd. have climbed to near an early 2021 peak, while those for food delivery firm Meituan have more than doubled this year, suggesting that confidence is returning after a years-long official crackdown on the sector.

 

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