China’s Next-Generation Tech Firms Hit Hard by Market’s Pullback
Stock in former darlings such as Meituan, Pinduoduo and Kuaishou has dropped by more than one-third from highs reached earlier this year.
A chill has fallen over China’s new generation of tech giants, with stock in former market darlings such as Meituan, Pinduoduo Inc. and Kuaishou Technology dropping by more than one-third from highs reached earlier this year.
Brendan Ahern, the chief investment officer for KraneShares in New York, said some investors were selling down holdings of high-growth stocks and those that benefited from work-from-home trends. He said funds were being redeployed into cyclical-value stocks, meaning those that trade on modest valuations compared with measures such as earnings or book value and that are more sensitive to fluctuations in the economy.
“This is kind of a rebalancing taking place globally, and you’ve seen an element of this in the U.S., in Taiwan, and in South Korea,” Mr. Ahern said. He said that in the U.S. newer players such as cloud-computing company Snowflake Inc. that haven’t become profitable, had also sold off more heavily recently.