Goldman Sachs strategists indicate that hedge funds reduced their holdings in the U.S. tech giants during the first quarter while increasing investments in Chinese companies listed in the U.S.
According to Bloomberg, Ben Snider, a senior strategist with Goldman Sachs' U.S. Portfolio Strategy Team, wrote in a report on the 20th that despite escalating trade tensions, funds have increased investments in Chinese company ADRs. The report states that the most popular ADRs held by hedge funds include Alibaba, Pinduoduo, and Baidu.
This Goldman Sachs analysis covers 684 hedge funds managing approximately $3.1 trillion (13.31 trillion Malaysian Ringgit) in stock assets.
This shift in holdings highlights the rising attractiveness of Chinese tech stocks. In the eyes of global investors, China's rise in emerging tech fields is redefining its position. Earlier this year, the technological breakthrough by Chinese AI company DeepSeek shook global markets, leading to a pullback in the stock prices of the U.S. tech giants, marking a turning point for international investors to reassess Chinese tech stocks.
Moreover, Chinese tech companies are considered more attractively valued. Data shows Alibaba's expected P/E ratio is about 13 times, and Pinduoduo's P/E ratio is less than 10 times. Among the 'Tech Giants,' only Alphabet, Google's parent company, has a P/E ratio of less than 20 times.
However, Goldman Sachs strategists note that the timing of this portfolio adjustment is not ideal, as U.S. tech giants have risen more than 10% in the second quarter, while Chinese concept stocks have been dragged down by trade tensions.