Billionaire hedge fund founder David Tepper disclosed that, following the Federal Reserve’s recent rate cut, he opted to significantly invest in Chinese stocks. Tepper explained his strategy in an interview with CNBC’s “Squawk Box” on Thursday, stating, “I thought that what the Fed did last week would lead to China easing, and I didn’t know that they were going to bring out the big guns like they did.” He described a notable shift in his investment approach.
Tepper elaborated on his expanded investments in Chinese stocks, noting, “We got a little bit longer, more Chinese stocks,” and mentioning that his former limits of 10% to 15% in Chinese equities are no longer applicable. He suggested that he might have considerably increased his stake, including significant purchases of large-cap tech giants like Alibaba and Baidu, following the U.S.’s interest rate reduction earlier in the month.
Expressing optimism about the Chinese market, Tepper highlighted that state media reported Chinese President Xi Jinping and other top leaders had reaffirmed efforts to stimulate the economy. This announcement followed China’s recent interest rate cuts and additional measures to support the property market. Tepper described these steps as unexpectedly robust, particularly the fiscal stimulus measures, which exceeded market expectations.
The iShares China Large-Cap ETF (FXI) saw a premarket rally of 6.8% following Tepper’s comments, building on gains from a strong session for both Chinese and Hong Kong stocks. Tepper remarked on the relative affordability of the Chinese market compared to U.S. equities, highlighting the “single multiple P/Es with double-digit growth rates for the big stocks” in China versus much higher valuations in the S&P 500.
As part of his broader investment strategy in China, Tepper indicated he would also invest in Wynn Resorts and Las Vegas Sands. These casino stocks surged by more than 6% and 7%, respectively.
Despite rising geopolitical concerns and the potential for increased tariffs between the U.S. and China deterring many investors, Tepper remained unfazed by these risks, stating succinctly, “My counter bet is that I don’t care.”