Ark Invest sold Chinese equities amid a sell-off that has knocked most Chinese companies down to 10% in the last month thereby the Chinese Communist Party's unexpected involvement in the market (CCP).
According to Bloomberg statistics, Ark's flagship Disruptive Innovation ETF's exposure to Chinese equities has dropped to less than 1% from a peak of 8% in February.
Ark's holdings of Chinese technology equities are at their lowest since 2014.
In the previous week, the thematic investment manager sold three million HUYA’s equities, one million shares of Tencent, and over 600,000 shares of JD.com.
The move coincides with heightened regulatory scrutiny of digital behemoths such as Didi and ByteDance in China. Didi was banned from Chinese app stores less than a week after its IPO due to data security concerns.
Because of the same issues, TikTok parent company ByteDance canceled its planned IPO. In recent months, China has also spearheaded a crackdown on digital behemoths Alibaba, Ant Group, and Tencent.
In a webcast with investors on Tuesday, Wood stated, From a valuation standpoint, these equities have fallen and, again, from a valuation standpoint, these stocks are likely to continue down.
The current price-to-earnings ratios of Chinese IT behemoths Alibaba, Baidu, and JD.com demonstrate the valuation reset.
Chinese equities have lost more than $500 billion in market value since their high in February.
The ARK Next Generation Internet ETF is still invested in Chinese companies at approximately 3.8%, down from 9% early this year.
Simultaneously, Ark Invest has started purchasing Bitcoin. In May, the ARK Cryptocurrency U.S. Fund LLC invested $20 million.
The ARK Next Generation ETF purchased140,157 Grayscale shares (GBTC) last week, just one day after purchasing 310,000 similar shares, for a total of $11 million at the current price.
Chinese investors have purchased more than $200 million in Bitcoin and Twitter stock. As the Chinese stock market continues to fall, an estimated one trillion dollars are on the move in search of other investments.