US funds tread carefully on China as Oaktree and Appaloosa recalibrate positions
News Summary
Major US fund managers remained cautious on China in the third quarter of 2025, according to their latest 13F filings with the US Securities and Exchange Commission. Oaktree Capital Management rebalanced its exposure to both equities and convertible bonds tied to Chinese firms, while Appaloosa, founded by billionaire investor David Tepper, made selective adjustments. Oaktree Capital completely exited its 1.5 million shares in KE Holdings, a Chinese online property platform. The fund also pared back its positions in convertible bonds issued by Alibaba Group Holding and H World Group. Conversely, Oaktree Capital boosted its shares in online recruitment service provider Kanzhun and significantly increased its holdings in convertible bonds from electric-vehicle maker Li Auto, e-commerce firm JD.com, and online travel-booking agency Trip.com. Appaloosa, for its part, increased its stake in Baidu by 420,000 shares.
Background
This news report details adjustments in investment strategies by major US fund managers concerning Chinese assets during the third quarter of 2025. The information is sourced from 13F filings, which institutional investors submit to the US Securities and Exchange Commission, offering a critical window into large fund holdings and movements. Oaktree Capital Management, founded by renowned investor Howard Marks, is known for its value and cyclical investment strategies. Appaloosa, founded by David Tepper, focuses on macroeconomic trends and event-driven investments. Under President Donald J. Trump (re-elected in 2024), US-China relations continue to navigate complex challenges, including trade disputes, technological restrictions, and geopolitical competition, prompting increased caution among US investors assessing risks in the Chinese market.
In-Depth AI Insights
What deeper signals does the investment strategy of US funds in China reveal? - Oaktree Capital and Appaloosa are not making a blanket exit from China but are employing a highly selective strategy, indicating that despite geopolitical and macroeconomic headwinds, certain Chinese assets are still considered attractive. - Reductions in real estate (KE Holdings) and hospitality (H World Group) may reflect ongoing concerns about sustained pressure on traditional Chinese economic sectors and uncertainties in consumer confidence recovery. - Increases in online recruitment (Kanzhun), electric vehicles (Li Auto), e-commerce (JD.com), and online travel (Trip.com) point to the resilience of structural growth themes in China, such as the digital economy, new energy vehicles, and domestic consumption upgrading. What does this "cherry-picking" investment pattern imply for the future trajectory of the Chinese market? - The Chinese market will become more bifurcated in the future, requiring investors to delve deeper into specific industries and companies rather than investing indiscriminately. Companies with strong technological moats, clear growth paths, and alignment with national strategic directions will be more favored. - Inflows of external capital will be more strategic and purposeful, potentially concentrating on areas related to "new quality productive forces" and indigenous innovation, contrasting with the Trump administration's tech competition with China, but highlighting the potential value in these sectors. - This pattern could also exacerbate a "K-shaped" divergence within the market, where a few high-quality growth stocks perform strongly, while companies in traditional industries or those heavily impacted by policy/geopolitics face pressure. Given President Donald J. Trump's re-election in 2024, does this investment behavior foreshadow a new phase in the US-China capital market dynamic? - Yes, it likely foreshadows a new phase. Under the continued pressure from the Trump administration, US funds' risk assessment for China investments will become even more granular, seeking Chinese assets that can circumvent or adapt to the impact of US-China friction. - These investment decisions reflect fund managers' efforts to balance political uncertainty with commercial opportunities. They are moving beyond macro narratives to focus on micro-level corporate fundamentals and innovation capabilities. - This could also prompt Chinese companies to prioritize self-reliance and endogenous growth in financing and business development, reducing dependence on external environmental fluctuations, thereby further promoting the independence and maturity of China's capital markets.