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The fund, which outperformed most of its peers, recently added Tencent Holdings to its portfolio, betting on the gaming company’s attractive valuation despite further curbs on the industry by the Chinese government.
“I’m buying Tencent stock right now because it’s very cheap,” he said in an interview Wednesday. About a year ago, Mr. Pines’ fund sold most of its shares in Tencent and Taiwan Semiconductor Manufacturing Company (TSMC).
Tencent relinquishes its position as Asia’s second most valuable company after China’s new online gaming rules wipe US$53 billion from market value in 2023, halting third year of losses Ta. Pines said the stock is attractive, trading at less than 16 times forward earnings, or about half its average over the past 10 years.
ByteDance approves negotiations with Tencent and other buyers over video game operations
ByteDance approves negotiations with Tencent and other buyers over video game operations
Pines said that while China is not currently a desirable investment destination for many, the combination of ultra-cheap valuations and low allocations outweighs the risks of investing in the country’s stocks.
“We think it’s worth the risk of investing in China because the stock prices are so low,” he said.
The fund is also heavy on South Korea, favoring Samsung Electronics over TSMC in the Asian semiconductor space.
China to rein in excessive spending on video games, hurting world’s biggest market
China to rein in excessive spending on video games, hurting world’s biggest market
TSMC has been hit by a cyclical downturn, with the company’s stock trading at nearly five times book value, while Samsung’s earnings are poised to recover, Pines said, adding that South Korea’s lead in the memory chip sector He added that the company’s status puts it in a better position for now.
South Korea’s largest company this week reported a sharper-than-expected 35% decline in operating profit, reflecting weak global demand for consumer electronics, but Pines said the results reflected a sharper-than-expected 35% decline in operating profit. He said this does not preclude a positive outlook. “Things will only get better from here,” he said.
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