Cathie Wood Answers Westmoney's Question: The investment Opportunities in China Tech Stocks Still Remain, and there are Still Plenty of Investment Opportunities



We are ushering in a new brave world that is influenced by the globalization and tries to establish something new in place of the old. The accelerating development of technological breakthroughs is changing the way we live and work.

On October 12th, Cathie Wood, CEO of Ark Invest, discussed with SAXO bank CIO, Steen Jakobsen, and Head of Equity Strategy, Peter Garnry, to present their thoughts towards better investment for the future.

Notably, the question, which has received top likes from westmoney's "Q&A sessions with Cathie Wood" event, was asked to Cathie Wood and she thoughtfully answered it during the interview.

The core transcript of the interview is below:

[Chinese market/games]

SAXO: Yes, if I didn't know better, no, it's fine. It's. If I don't know any better, I would say, you want a crusade here, and it seems like this, I could see the light in your eyes. And. This is something that really, uh, talks to you and I think you did really well in explaining why you're doing what you do and what you're trying to achieve. So I think, I'm we absolutely with you on that, but we want to explore a few other things we do as well, Cathie and one is, of course, with the highlight that's always on you, when you started to sell China, it became a big issue, not only in US press, but certainly, in Asia as well.

And we have a question here from our friends, in the investment community called westmoney, good colleagues of us, they asking, ‘What are your views on China tech stock with the recent regulatory crack down by the Chinese government?’

And let me extend the question saying, they are really asking you, ‘How do you see the Chinese valuation. Do you see a future for Chinese technology, platform and stocks and how do they compare in one question?’

Cathie: Yes, well, we started pulling out after Jack Ma was effectively banished for something he said to a legislative committee focused on the financial services sector. Now I read what he said, and to me, I'm sure I miss something culturally. Because I didn't see anything insulting, but they were terribly insulted, and he is effectively gone, or now he's doing charitable good works. That was a red flag for us, but we didn't know how much of a red flag until we started seeing the heavy hand in terms of regulation on gaming and social networks. And yesterday I saw that the government is now investigating.

Regulators, financial regulators, and how they have regulated the financial system. And they're going after financial systems and their regulators. So there is a real, if I can say it's a bit of a purge going on right now, quite anti-capitalist, I would say. But there are still ways to invest. And we have cut down in our flagship portfolio, you'll see no Chinese stocks, because our flagship portfolio is our highest conviction names. But in our autonomous technology and robotics portfolio, we do own a few names that that have a few characteristics, one, very low gross margins. Profitability? UMM, the government does not consider profitability consistent with common prosperity, which is the new buzz phrase there.

So JD logistics,, PDD, names like that have very low margins. And they are serving common prosperity by moving into tier three, tier four cities and bringing logistics and online shopping opportunities to people who have not had them before. So they are consistent. We have kept a toehold in Tencent, despite the gaming regulations, because we do know. That the um, that the Chinese government wants the digital Yuan to be the reserve currency of Asia. And really only Tencent can help the Chinese government proliferate that, the digital Yuan, in the way it wants. But other than that, we have cut our exposures significantly.

SAXO: So what I hear you saying is that you still think there's opportunity, and I think you on the regard for saying, as long as its government sanctioned assets. Right now, it seems we have too much noise in the talk of the market for going on. I think Peter has a follow question which goes to some of that, but in the US, Peter.

Peter: Yes, the regulation that is going on in China, we've taught a lot in our team, whether that could, suddenly, you know, come to Europe or even the US. I mean, you're regulating the number of hours kids are gaming because it is, you can talk about engagement, or you can call it addiction, it's probably the same thing, maybe. But we were talking about to what extent that will come to the US, but also, you saw the front page, I guess with Mark Zuckerberg on Time magazine. And to what extent do you think platforms will be regulated? Facebook, you know, are we seeing the seats of regulation coming to the US?

Cathie: Well, I don't think I think there's a chance more in Europe that your regulatory regime is it tends to come after companies, even in the US, before the US regulatory regimes do. So I think there may be some of that in Europe, in the US, my sense is, there will be. There will not be that much at the margin everywhere. Yes. Um, I do have a little bit of a differentiated view on gaming, and it's born of my own experience in. Not in gaming, I'm not a gamer, but I'm watching.

I'm watching employees come into ARK. And there, if you've ever looked at our team page, they're very young. And what I've noticed is I can tell the difference in terms of strategic vision and understanding. Decisiveness. And thought, critical thought processes, I can tell the difference between gamers and non-gamers. So if anyone were to bring me in front of Congress to be an advocate for gaming, I would be. I think it's part of our new age, and you know, I raise my children in Montessori schools. And we were not. We were told not to let our children game, but I saw something different. My son was the game or not, my daughters. And I saw how his thought process, uh, developed much more quickly than my girls did in terms of this idea of strategic decision making and decisiveness, so that's a little bit on my soldbox. The lessons from Microsoft, at least here in the United States trying to break up Microsoft tells me this is going to last ten years. We're going to see a lot of deliberation about it.

A lot of tweaks at the margin, I don't think we will be breaking up our companies at all. And I do think when there is a problem out there, technology can take care of it. So if you think about blockchain technology, That is going to be the kiss of death for the data aggregators. That have grown up on the Internet, the Amazons, the Googles, the Facebooks. And If Gen-Z gets up in arms with the lack of privacy, I don't see it in millennials, but maybe Gen-Z will go there.

Then these platforms are going to lose a lot of their power, let the market take care of it. And just to another example here in the United States, the AT&T, the monopoly telephone system, was broken up into eight Baby Bells. What happened over the next thirty years? Because technology was changing the world of telecommunications, those companies started faltering and they had to consolidate again. So all that for nothing.


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The List of Top Ten Questions

1. Cyrus Janssen      187 Likes      

Q: As China's regulation on technology companies eases, what is the investing outlook for Chinese equities and/or bonds?

2. clearyouth      166 Likes

Q:Compared with large investment projects, how to grasp the direction of investment in small investment projects? Is there a correlation between the investment direction of them?

3. 了了      127 Likes

Q: In the context of the current epidemic, how investors look at innovation opportunities and how to avoid risks in investment reasonably?

4. 笙      77 Likes

Q:I want to know,as a successful investor, do you have any concerns about China's booming market economy?Or what do you think is the biggest investment risk going forward?

5. 言啊午啊許      76 Likes

Q: In the future era of intelligence, which industries should we choose to invest in

6. AaronNIOnerd      72 Likes

Q: Regarding robotaxi, with Chinese companies like Baidu/Momenta/AutoX already operating in the space, Mobileye starting in a number of countries, and up and comers like NIO positioned to enter the space, do you believe Tesla will be able to carve out a large piece of that market or do you see other companies as major players in the robotaxi space? Thank you!

7. ft_yaphets      62 Likes

Q: Will you consider buying into companies that provide game-streaming such as HUYA again? Although young teens will have their gaming hours regulated, there is still a large existing market of games which will continue using these services.

8. Musk      60 Likes


9. CoffeeTeaInvst      48 Likes

Q: With the recent stance of the Fed to dial back monthly bond purchases, do you see a rotation out of growth stocks into value stocks as seen from the recent dip in the valuations of tech giants (FAANG) are already significantly lower?

10. KonG.      34 Likes

Q:Which industry is the best to invest at present?
//发表于 2021-10-15 16:35
#Investment Experience#
#Cathie Wood#