Chinese stocks sell off after Xi Jinping's show of force
Nasdaq Golden Dragon Index lost 14.4 percent on Monday

Chinese stocks, popular with big fund managers, were hit by a dramatic sell-off after President Xi Jinping's third term was confirmed, causing billions of dollars in losses to those who held on to their portfolios.
The Nasdaq Golden Dragon Index, which tracks US-listed shares of Chinese companies, fell 14.4 percent on Monday, posting its biggest daily decline this year, amounting to around 50 percent. Stocks like Alibaba, JD.com, and Pinduoduo all plummeted.
Hong Kong's benchmark index, the Hang Seng, suffered its biggest single-day drop since November 2008 on Monday, falling as much as 1.6 percent in early trade on Tuesday, while China's CSI 300 fell as much as 1 percent before resuming its losses reduced.
Chase Coleman's Tiger Global hedge fund, Edinburgh-based investment group Baillie Gifford, and a group linked to Berkshire Hathaway vice chairman Charlie Munger are among investors with large holdings in Chinese equities.
The top position in Tiger Global's public equity portfolio as of June 30 was JD.com, according to the latest available regulatory filings. The Beijing-based logistics group closed Monday down more than 13 percent.
Tiger's more than 30 million shares of JD.com were worth about $2 billion as of June 30, a stake that -- if held -- would have lost more than $800 million in value since then, including a $168 million decline alone on Monday.
The New York-based hedge fund added to some Chinese investments this year, adding jobs website Kanzhun and electric car maker Li Auto to the top 10 positions in its stock portfolio at mid-year. Kanzhun fell 23 percent on Monday and Li Auto fell 17 percent. Tiger declined to comment.
China's growth rate in the third quarter was well below Beijing's annual target of 5.5 percent, according to data released Monday, while Xi secured an unprecedented third term as party leader. The news fueled worries about the future of the country's big tech companies after Xi tightened regulation of the sector.
Tiger has portrayed China as a market that has outperformed higher-rated American tech stocks.
"Although China remains out of favor with most investors, our long Chinese positions have fallen less sharply than their US counterparts year to date," the hedge fund said in a letter to its investors obtained by the Financial Times on March 3 August could see. The company's $17 billion flagship hedge fund was down more than 50 percent at the time.
Baillie Gifford has also bet heavily on Chinese stocks. Its top 10 holdings as of Sept. 30 included shopping platform Meituan and social media and gaming conglomerate Tencent, both of which fell more than 14 percent on Monday.
Tom Slater, manager of the £14.2bn fund, told the Financial Times in May that "it was a mistake to reduce our holdings in Western online platforms instead of buying their Chinese counterparts".
Some prominent investors remain bullish on Alibaba even after Chinese authorities halted fintech firm Ant Group's planned listing in 2020. Alibaba's shares have since fallen almost 80 percent, attracting investors looking for bargains.
Munger helped lead the Daily Journal, the Los Angeles-based newspaper chain where he is a director and former chairman, to an investment in Alibaba, focusing on the company's $342 million stock portfolio.
Alibaba's stake was valued at more than $70 million after the Daily Journal bought more than 600,000 shares late last year. As of Sept. 30, the company had reduced its holdings to 300,000 shares worth approximately $24 million, the filings show.
In recent quarters, the Daily Journal borrowed to invest in a stock portfolio that also includes stakes in Bank of America, Wells Fargo and South Korean steelmaker Posco. This emerges from public releases and comments by Munger at the Daily Journal annual meeting in February 2022.
"China is a large, modern nation. It has a huge population and has achieved tremendous modernity in the last 30 years," Munger said at the gathering.
"[We] invested some money in China because, in terms of the strength of the company, we could get more value for the price of security than in the United States," he said.
Baillie Gifford and the Daily Journal did not immediately respond to requests for comment. Munger declined to comment.
