(Bloomberg) -- Billionaire investor David Tepper is buying more of “everything” related to China after Beijing rolled out sweeping stimulus measures that exceeded expectations.
Tepper, who founded Appaloosa Management in 1993, attributed his big bet on Chinese assets to the shift introduced by the top leaders in Beijing this week. “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 said in a CNBC interview Thursday.
In the second quarter, his hedge fund held on to most of its holdings in the Chinese companies that were scooped up earlier this year, even as stakes in Alibaba Group Holding Ltd. and US tech giants were trimmed.
Now, after China’s top leaders ramped up efforts to revive growth with pledges to support fiscal spending and stabilize the property sector, he’s once again snapping up Chinese stocks including tech giants Alibaba and Baidu Inc.
“We got a little bit longer, more Chinese stocks,” he said, citing low valuations, even after this week’s price surge, as one of the reasons he’s a buyer.
The comments came after China’s onshore equity benchmark, the CSI 300 Index, jumped 4.2% Thursday and is heading for its biggest weekly gain in almost a decade. The Nasdaq Golden Dragon index of US-listed Chinese stocks also rallied 11% during the New York session, the biggest jump in more than two and a half years.
Tepper isn’t the only bull in Chinese stocks. Goldman Sachs Group Inc.’s prime brokerage saw hedge funds buying Chinese equities on Tuesday while Morgan Stanley strategists led by Laura Wang are predicting the CSI 300 would climb another 10% in the near term.
Before the recent rally, Tepper, along with Scion Asset Management’s Michael Burry, had been one of the few prominent China stock bulls among hedge fund investors.
Tepper also indicated that he’s removed his self-imposed guardrails on Chinese stocks. “I have limits, historic limits. I probably said a long time ago, I don’t go above 10% or 15%. Well, that’s probably not true anymore,” he told CNBC. Still, he said he’d set “another new found limit” in a pullback.
He was cheered by the swap facility unveiled by PBOC governor Pan Gongsheng allowing securities, funds and insurance companies to tap the central bank to buy stocks. “That’s a great deal for me. I want to be over there to borrow some of this stuff,” he said.
Tepper downplayed the thorny relations between China and the US and the potential new tariffs. “I do not care,” he said. “This is internal stimulus,” and the fiscal stimulus is going to encourage consumption.
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