Temasek cuts losses in Chinese education stocks, trims Alibaba and Didi Global stakes after missteps, US filing shows

·4-min read

Temasek Holdings cut its losses on Chinese education and technology stocks while trimming its stakes in Alibaba Group Holding and Didi Global in the third quarter, after walking into a regulatory minefield and a global sell-off.

The Singapore state investment arm sold all its American depositary shares in Kanzhun, TAL Education, New Oriental Education Technology, after building up positions in them in the second quarter, according to its 13F filing with the Securities and Exchange Commission late Monday.

It also exited from Baidu, and reduced its holding in Alibaba, which owns the South China Morning Post, and Didi Global, among the largest Chinese tech giants to suffer from China’s antitrust clampdown that eroded more than US$1 trillion in capitalisation across the US, Hong Kong and mainland markets.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

These six ADRs tumbled by 9 per cent to 81 per cent in the third quarter, according to Bloomberg data. On average, Temasek may have realised about US$160 million of losses on them, according to the Post’s calculation based on the IPO and declines in those stocks during the quarter.

“We do not comment on the specific activities around the holdings for our portfolio companies,” a Temasek spokesman said in an email reply to the Post on Tuesday. “As an active investor, it is usual for us to rebalance our portfolio from time to time.”

Temasek is holding off on new investment in Chinese technology companies for now due to uncertainty over Beijing‘s crackdown on the sector, Nikkei Asia reported on Monday, citing an interview with a top executive. The Chinese government wants to address issues like monopoly power of big tech platforms, data privacy, and income inequality.

Rohit Sipahimalani, Chief Investment Strategist at Temasek and Head of Southeast Asia. Photo: Handout
Rohit Sipahimalani, Chief Investment Strategist at Temasek and Head of Southeast Asia. Photo: Handout

“It‘s just that in China, the way it is being executed has been a little more blunt and quick, and that is why it has created a lot of shocks out there,” chief investment strategist Rohit Sipahimalani said in the report. Temasek will wait to deploy more capital until there is more regulatory clarity in that space, he added.

China started clamping down on the growing influence of powerful business groups a year ago, by foiling the blockbuster listing of Ant Group and probing antitrust breaches at Alibaba and other internet-platform operators. China later pushed the “common prosperity” agenda to promote wealth distribution, prompting companies and tech moguls to set aside corporate profits and personal fortune for social services.

Ride-hailing giant Didi Global was placed under a cybersecurity review in July, two days after its stock offering in the US, triggering sell-offs in the sector, while after-school tutoring firms were also banned from making a profit that month.

Saudi sovereign wealth fund loads up on Alibaba, Just Eat, Lucid Motors, Pinterest and Walmart as it triples its holdings of US stocks

Temasek’s 13F filing on Monday listed investments in at least nine Chinese companies. In other third-quarter portfolio tweaks, it bought more of the ADRs of 17 Ed & Technology Group, Beigene, Gracell Biotechnologies, Pinduoduo and ZTO Express and maintained its stakes in Tencent Music Entertainment and 21Vianet Group.

In all, Temasek listed holdings in 91 companies with a combined market value of US$28.6 billion at the end of September, compared with 99 companies worth US$34.3 billion at the end of June. They represented a small portion of the S$381 billion (US$281.6 billion) of assets it managed on March 31.

Temasek had about 27 per cent of its assets invested in China in July, unchanged from March, according to its July investment review. China remains Temasek’s largest allocation by geography outside its home base.

Additional reporting by Zhang Shidong

More from South China Morning Post:

This article Temasek cuts losses in Chinese education stocks, trims Alibaba and Didi Global stakes after missteps, US filing shows first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting