Ray Dalio’s China Stocks
In this article, we discuss Ray Dalio’s China stocks. If you want to skip our detailed discussion on Dalio’s stance on China over the years, head directly to Ray Dalio's Top 5 China Stocks.
Ray Dalio’s Bridgewater Associates established its presence in Shanghai's Free-Trade Zone in 2016. Simultaneously, notable American hedge funds, including Jim Chanos’ Kynikos Associates and Kyle Bass’ Hayman Capital Management, opened short positions on Chinese equities. These investors believed that the Chinese economy was at risk of a financial crisis due to the increasing levels of corporate and public-sector debt. Hubert Tse, a partner with Shanghai-based law firm Boss & Young, explained the situation:
“When China decided to open domestic markets to foreign asset management companies by allowing them to set up wholly foreign-owned enterprises, they wanted in many ways to first attract the biggest and best in each class. By attracting Bridgewater, which is the largest in the hedge fund world, China felt it would help China attract the best hedge funds from around the world. China also felt that it will only help further open up the market by allowing the biggest and best to come in first. There is no point in allowing in the small ones to come in first.”
“China is having a heart transplant”
In 2016, Ray Dalio, like the rest of the world, tried to make sense of the Chinese economy, and concluded that China was undergoing a remarkable economic shift, transitioning from an investment-focused economy to a consumption-based economy. However, this transition presented challenges due to the accumulation of debt and saturation in sectors that previously supported the economy, such as industrials and property, during the investment phase. Dalio commented:
"China is having a heart transplant. You're probably going to be fine in the long run, but it's going to weaken you, and it's got to be well executed ... You will get through it, and you will be better than before. I think that's what the situation is."
Don't Miss: Billionaire Bridgewater Founder Ray Dalio’s Top 10 Holdings in 2023
He also emphasized the need for strong leadership to see the economy through the economic transition. In an interview with Bloomberg TV's Erik Schatzker, Dalio said:
"There are good ways to manage these things, and there are bad ways to manage these things. Leadership is very important."
"We are in conflict with China. You can call it a war."
At the end of July 2020, billionaire investor Ray Dalio expressed concern about the mounting tensions between the United States and China, cautioning that it could result in a "capital war" that would significantly devalue the dollar. On Fox News' "Sunday Morning Futures", Dalio stated:
"We are in conflict with China. You can call it a war. There's a trade war, there's a technology war, there is a geopolitical war and there could be a capital war."
Furthermore, he noted that if the US government imposed restrictions on investments in China or withheld payments on Chinese debt, it would create additional challenges for the US economy. Dalio elaborated more on the subject:
"If you say, by law, don't invest in China or even possibly withholding the payment of bonds that the United States owes payment on in China, these things are possibilities and they have big implications such as for the value of the dollar because investors, premarket investors, are not used to having those things dictated by the government."
“The Chinese are doing things to build confidence.”
In November 2020, Ray Dalio advised investors not to be apprehensive about investing in China, especially given concerns following the regulatory obstacles faced by Jack Ma's Ant Group. Speaking at a webinar hosted by the National Committee on United States-China Relations, Dalio emphasized that the potential benefits of diversifying into China outweigh the associated risks. While addressing the Webinar moderator Stephen Orlins, Dalio said:
“The Chinese are doing things to build confidence. They can undermine it, but I think that the diversification outweighs the risks.”
The decision to cancel the Ant Group IPO served as a public reprimand of Jack Ma, who had made critical comments about China's financial regulators. This incident demonstrated the risks of investing in a region where the government maintains a strong foothold and control over the private sector. Despite this, Ray Dalio defended the regulators' actions. He made the following comment regarding the issue:
“Ant is a whole new concept, innovative concept, in terms of banking, and almost could replace or threaten the banking system in China. And it hasn’t yet been properly established in terms of regulatory review. I think it was progressing too fast, and it had to be clear as to who the authority was.”
As per Ray Dalio, 2020 marked a defining year for Chinese financial markets. While China's financial system was currently less advanced compared to Western counterparts, Dalio predicted that it is only a matter of time before China emerges as a strong contender to challenge the supremacy of Wall Street and London. He told Financial Times on January 9, 2021:
“China already has the world’s second largest capital markets, and I think they will eventually vie for having the world’s financial centre. Throughout history, the largest trading countries evolved into having the global financial centre and the global reserve currency.”
Following up in a mid-December interview, Dalio commented:
“When you see the transition from one empire to another, from the Dutch to the British to the American, to me it just looks like that all over again.”
Investors “continue to miss out” on China
In August 2021, Dalio noted that some Western investors have misunderstood China's regulatory crackdown, labeling it as "anti-capitalist." He clarified that his statement is directed towards Western observers who lack direct contact with policymakers and fail to closely track the government's evolving changes in regulations. Dalio took to his LinkedIn account and wrote:
“They interpret moves like these two recent ones as the Communist Party leaders showing their true anti-capitalist stripes even though the trend over the last 40 years has clearly been so strongly toward developing a market economy with capital markets, with entrepreneurs and capitalists becoming rich. As a result, they’ve missed out on what’s going on in China and probably will continue to miss out.”
Also read: Billionaire Ray Dalio’s Top 12 Dividend Stock Picks
On November 24, 2021, Bridgewater Associates disclosed plans to launch its third investment fund in China and said that it had already secured approximately $1.25 billion in capital. This move indicated Dalio's optimistic outlook on the China market and positioned Bridgewater Associates as one of the largest foreign managers of private funds in the country.
The US vs. China: "Yes, it's winning."
In December 2021, Ray Dalio confirmed his belief that China is outperforming the United States in the economic competition between the two nations. Despite the controversy surrounding his stance, Dalio doubled down on his view and predicted that the Chinese economy will surpass the US in size, becoming significantly more powerful. On the BBC's "Newsnight" program, Dalio said:
"Yes, it's winning. Their growth rate at a slow level is about twice the Western world's growth rate at a fast level."
Ray Dalio further added:
"[China is] four times the size population-wise [than] the United States. So if its per capita income was half the size, the [economy] as a whole would be twice the size. So yes, that's the character of the environment where it's winning and it has a lot more likelihood of being much larger, stronger in most ways."
Bridgewater Associates has significantly increased its fund assets in China, which have more than doubled over the past year to surpass 20 billion yuan as of January 10, 2023. This achievement makes Ray Dalio's fund the largest foreign hedge fund in Beijing. As of early November 2022, Bridgewater's assets under management in China had surpassed 19 trillion yuan. Subsequently, the introduction of a series of feeder funds through China Merchants Bank in December made the assets exceed 20 trillion yuan.
U.S. and China are “on the brink of war and are beyond the ability to talk.”
In April 2023, Dalio published an essay on LinkedIn, where he wrote that the U.S. and China are “on the brink of war and are beyond the ability to talk.” He expressed his concerns about the potential for an economic and physical war arising from the issue of Taiwanese independence. Dalio commented at Forbes Iconoclast Summit in New York:
“The relative position of the United States has declined, and the relative situation in China has risen. I am not saying the Chinese are going to win over the Americans, but they’re going to be comparable powers in a conflict, and those conflicts are multi-dimensional. Talking is almost counterproductive because there’s so much blaming and untangling how we got here.”
According to Goldman Sachs, India's economy is projected to surpass that of the United States by 2075, making it the second-largest economy in the world after China. By 2075, it is forecasted that China's economy will be worth a whopping $57 trillion. This development lends some credibility to Ray Dalio's strong focus on China. Some of the top China stocks in Dalio's Q1 2023 portfolio include PDD Holdings Inc. (NASDAQ:PDD), Yum China Holdings, Inc. (NYSE:YUMC), and New Oriental Education & Technology Group Inc. (NYSE:EDU).
Our Methodology
For our list of Ray Dalio’s China stocks, we scanned his hedge fund’s portfolio for the first quarter of 2023 and selected 15 Chinese (and Asian) companies where Dalio held the largest stake. These are ranked in the ascending order according to Dalio’s stake value.
Ray Dalio of Bridgewater Associates
Ray Dalio's China Stocks
15. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 20
Bridgewater Associates’ Stake Value: $16,681,587
XPeng Inc. (NYSE:XPEV) is a Chinese company that specializes in the design, production, and commercialization of intelligent electric vehicles. Ray Dalio’s Bridgewater Associates owned 1.50 million shares of XPeng Inc. (NYSE:XPEV) in the first quarter of 2023, worth $16.6 million and representing 0.10% of the total portfolio. In June, XPeng Inc. (NYSE:XPEV) reported an upward trend in delivery growth, marking the fifth consecutive month of increase. They delivered a total of 8,620 Smart EVs, which is a 15% month-on-month rise. Among these deliveries, the P7 series saw a notable increase of 17% compared to the previous month. However, when compared to the same period last year, June's deliveries decreased by 43%.
According to Insider Monkey’s first quarter database, 20 hedge funds were bullish on XPeng Inc. (NYSE:XPEV), compared to 17 funds in the earlier quarter. Jos Shaver’s Electron Capital Partners is a prominent stakeholder of the company, with a position worth $25.5 million.
In addition to PDD Holdings Inc. (NASDAQ:PDD), Yum China Holdings, Inc. (NYSE:YUMC), and New Oriental Education & Technology Group Inc. (NYSE:EDU), XPeng Inc. (NYSE:XPEV) is one of Ray Dalio’s top China stocks.
14. Sea Limited (NYSE:SE)
Number of Hedge Fund Holders: 65
Bridgewater Associates’ Stake Value: $19,172,816
Sea Limited (NYSE:SE) is involved in different digital businesses, including entertainment, e-commerce, and digital financial services. Sea Limited (NYSE:SE) was incorporated in 2009 and is headquartered in Singapore. Ray Dalio’s hedge fund raised its stake in Sea Limited (NYSE:SE) by 28% in Q1 2023, holding 221,523 shares worth just over $19 million.
On May 16, Sea Limited (NYSE:SE) reported Q1 earnings per share of $0.15, falling short of Wall Street estimates by $0.73. The revenue of $3.04 billion increased 4.8% on a year-over-year basis, in-line with market consensus. The company's first-quarter earnings fell significantly below expectations primarily because of a substantial rise in loan loss reserves.
According to Insider Monkey’s first quarter database, 65 hedge funds were bullish on Sea Limited (NYSE:SE), compared to 48 funds in the prior quarter. Jay Chen’s Himension Capital is the largest stakeholder of the company, with 4.7 million shares worth $406.6 million.
Artisan Developing World Fund made the following comment about Sea Limited (NYSE:SE) in its second quarter 2023 investor letter:
“Bottom contributors to performance for the quarter included Southeast Asian Internet leader Sea Limited (NYSE:SE). Sea declined due to rising investor concerns around e-commerce competition from TikTok in Southeast Asia during a period of subdued gross merchandise value growth, while the gaming business continues to struggle.”
13. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 22
Bridgewater Associates’ Stake Value: $19,771,428
Li Auto Inc. (NASDAQ:LI) engages in the design, manufacture, and selling of innovative electric vehicles. The company’s product lineup includes the Li ONE and Li L series, which are intelligent electric vehicles designed for sustainable transportation. Li Auto Inc. (NASDAQ:LI) is one of the top China stocks in Ray Dalio’s portfolio. The billionaire owned 792,442 shares of Li Auto Inc. (NASDAQ:LI) in Q1 2023, worth $19.7 million. However, Dalio cut his stake in the company by 55% during the March quarter.
In June 2023, Li Auto Inc. (NASDAQ:LI) delivered a total of 32,575 vehicles, representing a 150.1% year-over-year growth. This strong performance continued throughout the second quarter, closing with a total of 86,533 deliveries, which is an impressive 201.6% increase compared to the same period last year. The company had initially projected a range of 76,000 to 81,000 deliveries for Q2. Furthermore, the total deliveries for the first half of 2023 amounted to 139,117 vehicles, exceeding the 133,246 deliveries achieved during the entirety of the last fiscal year.
According to Insider Monkey’s first quarter database, 22 hedge funds were long Li Auto Inc. (NASDAQ:LI), compared to 25 funds in the prior quarter. Vincent Gao’s CoreView Capital is the largest position holder in the company.
12. ZTO Express (Cayman) Inc. (NYSE:ZTO)
Number of Hedge Fund Holders: 23
Bridgewater Associates’ Stake Value: $22,118,584
ZTO Express (Cayman) Inc. (NYSE:ZTO) is a logistics company based in Shanghai, China, specializing in express delivery services and additional value-added logistics solutions. ZTO Express (Cayman) Inc. (NYSE:ZTO) is one of Ray Dalio’s top China stocks. In the first quarter of 2023, Dalio’s Bridgewater Associates held 771,758 shares of the company worth $22 million. However, the billionaire trimmed his stake by 44% during Q1.
On May 17, ZTO Express (Cayman) Inc. (NYSE:ZTO) reported a Q1 non-GAAP EPS of $0.35, beating market consensus by $0.10. The revenue of $1.31 billion increased 5.6% year-over-year but missed Wall Street estimates by $20 million. The cash generated from operating activities in the first quarter amounted to RMB2,738.0 million, marking a significant increase compared to RMB1,105.4 million in the same quarter last year.
According to Insider Monkey’s first quarter database, 23 hedge funds were bullish on ZTO Express (Cayman) Inc. (NYSE:ZTO), compared to 21 funds in the prior quarter. Kerr Neilson’s Platinum Asset Management is the largest stakeholder of the company, with 16 million shares worth $461 million.
11. TAL Education Group (NYSE:TAL)
Number of Hedge Fund Holders: 18
Bridgewater Associates’ Stake Value: $22,130,820
TAL Education Group (NYSE:TAL) offers tutoring services for students in kindergarten through twelfth grade in China. Securities filings for the first quarter of 2023 reveal that Ray Dalio raised his stake in TAL Education Group (NYSE:TAL) by 153%, holding 3.45 million shares worth $22 million, representing 0.13% of the total portfolio. It is one of Ray Dalio’s top China stocks.
On April 27, TAL Education Group (NYSE:TAL) reported a Q4 non-GAAP EPADS of -$0.02, falling short of Wall Street estimates by $0.02. While the revenue of $269 million dropped 50.3% year-over-year, it exceeded market expectations by $18.15 million.
According to Insider Monkey’s first quarter database, 18 hedge funds were bullish on TAL Education Group (NYSE:TAL), compared to 28 funds in the earlier quarter. Tiger Pacific Capital held the leading stake in the company, comprising 7.93 million shares worth $50.85 million.
Here is what Tao Value has to say about TAL Education Group (NYSE:TAL) in its Q4 2021 investor letter:
“Looking at the value destruction, TAL Education (TAL) is one of the most painful losses. Although the company is part of the “Mindful Compounder” bucket, it impaired by 95%. If anything, it is a heavy price paid for learning that stock returns are driven by more than business and market factors, but also societal factors. I personally think having 4 out of the 5 top value destructions being recently started positions in Chinese stocks is a bit biased, as the market may have overreacted the most to anything China-related recently.”
10. Qifu Technology, Inc. (NASDAQ:QFIN)
Number of Hedge Fund Holders: 12
Bridgewater Associates’ Stake Value: $23,092,363
Qifu Technology, Inc. (NASDAQ:QFIN) operates a credit-tech platform called 360 Jietiao in China. The platform offers credit-driven services that connect borrowers with financial institutions. It is one of Ray Dalio’s favorite China stocks. In the first quarter of 2023, Dalio owned 1.19 million shares of Qifu Technology, Inc. (NASDAQ:QFIN) worth $23 million, representing 0.14% of the total portfolio.
On June 20, Qifu Technology, Inc. (NASDAQ:QFIN) announced the approval of a share repurchase plan by its board. As per the plan, the company has the authority to buy back its American depositary shares or Class A ordinary shares up to a total value of $150 million within the next 12 months, commencing from June 20, 2023.
According to Insider Monkey’s first quarter database, 12 hedge funds were long Qifu Technology, Inc. (NASDAQ:QFIN), with combined stakes worth $422 million. Richard Li’s OLP Capital is the biggest position holder in the company, with 12.6 million shares worth $245.2 million.
9. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 18
Bridgewater Associates’ Stake Value: $26,549,900
NIO Inc. (NYSE:NIO) is a Chinese company that specializes in the design, development, manufacturing, and sale of smart electric vehicles. Additionally, NIO Inc. (NYSE:NIO) offers a range of power solutions such as home charging solutions, battery swapping services, mobile charging services, and access to a network of public chargers through their application. In Q1 2023, Ray Dalio held 2.5 million shares of NIO Inc. (NYSE:NIO) worth $26.5 million, making it one of the top China stocks in his portfolio. However, the billionaire decreased his position in the company 41%.
In June 2023, NIO Inc. (NYSE:NIO) reported that it delivered 10,707 vehicles, contributing to a total of 23,520 vehicles delivered in the second quarter. The monthly delivery in June saw a significant increase of 74% compared to the previous month, but experienced a decline of 17.4% year-over-year. The second-quarter delivery of 23,520 units aligned with the lower end of the earlier guidance.
According to Insider Monkey’s first quarter database, NIO Inc. (NYSE:NIO) was part of 18 hedge fund portfolios, compared to 25 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a prominent stakeholder of the company, with 4.17 million shares worth $43.8 million.
8. BeiGene, Ltd. (NASDAQ:BGNE)
Number of Hedge Fund Holders: 16
Bridgewater Associates’ Stake Value: $28,475,177
BeiGene, Ltd. (NASDAQ:BGNE) is a Chinese biotechnology company focused on the development and commercialization of cancer medicines worldwide. The company was founded in 2010 in Beijing, China. Securities filings for Q1 2023 revealed that Ray Dalio held 132,117 shares of BeiGene, Ltd. (NASDAQ:BGNE) worth $28.4 million. It is one of Dalio’s top China stocks.
On July 12, BeiGene, Ltd. (NASDAQ:BGNE) received approval from the FDA for its supplemental new drug application (sBLA) regarding the tyrosine kinase inhibitor Brukinsa. The company is seeking to expand the label of Brukinsa for the treatment of relapsed or refractory (R/R) follicular lymphoma in adults. The FDA will now review the sBLA and consider approving the expanded use of Brukinsa for this indication.
According to Insider Monkey’s first quarter database, 16 hedge funds held stakes worth $3.7 billion in BeiGene, Ltd. (NASDAQ:BGNE), compared to 15 funds in the prior quarter worth $3.8 billion.
Here is what Longleaf Partners Asia Pacific UCITS Fund has to say about BeiGene, Ltd. (NASDAQ:BGNE) in its Q1 2022 investor letter:
“One company that we do not hold, but that serves as a good example of corrective action, is BeiGene (NASDAQ:BGNE). The company recently switched auditors to Ernst & Young USA from Ernst & Young China for its US Securities and Exchange Commission (SEC) audit reports to avoid a delisting in the US.”
7. Lufax Holding Ltd (NYSE:LU)
Number of Hedge Fund Holders: 16
Bridgewater Associates’ Stake Value: $29,194,087
Lufax Holding Ltd (NYSE:LU) is a Chinese company that runs a technology-led personal financial services platform. The platform provides various loan products, including unsecured loans, secured loans, and consumer finance loans. Lufax Holding Ltd (NYSE:LU) is one of Ray Dalio’s top China stocks. In Q1 2023, Dalio upped his stake in the company by 114%, holding 14.3 million shares worth $29 million.
On May 22, Lufax Holding Ltd (NYSE:LU) reported Q1 non-GAAP earnings per share of $0.04, beating Wall Street consensus by $0.02. The revenue of $1.47 billion dropped 46.2% year-over-year during the March quarter, consequently missing market estimates by $260 million.
According to Insider Monkey’s first quarter database, Lufax Holding Ltd (NYSE:LU) was part of 16 hedge fund portfolios, compared to 17 in the prior quarter. Thomas Steyer’s Farallon Capital is the largest stakeholder of the company, with 38.2 million shares worth $78 million.
6. Kanzhun Limited (NASDAQ:BZ)
Number of Hedge Fund Holders: 27
Bridgewater Associates’ Stake Value: $32,761,116
Kanzhun Limited (NASDAQ:BZ) is a company in China that specializes in offering online recruitment solutions. Ray Dalio’s Bridgewater Associates owns 1.72 million shares of Kanzhun Limited (NASDAQ:BZ) as of the first quarter of 2023, worth $32.7 million and representing 0.19% of the total holdings. The billionaire raised his stake in the company by 22% in the March quarter.
On May 24, Kanzhun Limited (NASDAQ:BZ) reported a Q1 non-GAAP EPS of $0.08 and a revenue of $186 million, outperforming Wall Street estimates by $0.02 and $4.88 million, respectively. In the first quarter of 2023, Kanzhun Limited (NASDAQ:BZ)’s average number of monthly active users (MAU) amounted to 39.7 million, representing a significant growth of 57.5% compared to 25.2 million users in the prior-year quarter.
According to Insider Monkey’s first quarter database, 27 hedge funds were bullish on Kanzhun Limited (NASDAQ:BZ), compared to 23 funds in the prior quarter. Chase Coleman’s Tiger Global Management is the largest stakeholder of the company, with 8.5 million shares worth $162 million.
Like PDD Holdings Inc. (NASDAQ:PDD), Yum China Holdings, Inc. (NYSE:YUMC), and New Oriental Education & Technology Group Inc. (NYSE:EDU), Kanzhun Limited (NASDAQ:BZ) is one of Ray Dalio’s top Chinese investments.
Click to continue reading and see Ray Dalio’s Top 5 China Stocks.
Suggested articles:
Disclosure: None. Ray Dalio’s China Stocks is originally published on Insider Monkey.