'Shark Tank' investor Kevin O'Leary says the rout in Chinese tech stocks like Alibaba is a good buying opportunity
The "Shark Tank" investor said he added Tencent, Alibaba and Meituan to his portfolio despite the risk of Chinese ADRs being delisted.
"Shark Tank"/ABC
- Shark Tank's O'Leary said on Monday he bought the dip in Chinese stocks due to their growth potential.
- He said that he bought Tencent, Alibaba and the Chinese Uber Eats rival, Meituan.
- O'Leary believes China will be the world's largest economy in several years.
Billionaire investor Kevin O'Leary said he's bought the dip in Chinese technology stocks, which have lost billions in market value this week, as he sees huge growth potential in China in the coming years.
"Any time you get an analyst calling stocks — multi-billion dollar market cap stocks, growing in an economy that's larger than ours — 'uninvestable', that's a buy signal, that's what that is," O'Leary said on CNBC's "Halftime Report" on Monday.
The Shark Tank star was referring to JPMorgan analyst Alex Yao's comments on Chinese stocks, where he downgraded Alibaba among other Chinese stocks.
"Alibaba is not only the sentiment barometer of China internet but also a proxy to China online consumption," Yao said in a recent note.
According to "Mr. Wonderful", this was an opportunity that he simply couldn't ignore.
"To get Alibaba down 7% in one hour is hard to do. That's a very large market cap stock, so thank you analyst guy, I appreciate that. But at the end of the day they're still gonna grow and that's why I bought them," he said.
As well as buying Alibaba, he also bought Tencent and Uber Eats rival Meituan. O'Leary also went on to say he believes China will be the world's largest economy in several years and it's important to invest there.
"Look, I know we're competing with them, but that doesn't mean I don't invest in it, because I can't get growth like that and these are the big names there that already have the distribution systems in place," he said.
Chinese stocks have plummeted in the past day due to an increase in Covid cases which has threatened the country's zero-covid policy and resulted in factory closures due to lockdowns in the tech-hub of Shenzhen.
This news didn't discourage O'Leary and nor does the potential that the US will delist more Chinese firms, whose stock trade on US exchanges via American Depositary Receipts - a certificate that represents foreign shares.
"Now, I'm not sure I'll catch the bottom here, but you have to make a fundamental decision: What's been against China? The headwinds for Chinese stocks — all of them — is the ADR structure."
These stocks came under pressure from US regulators during the Trump presidency as they wanted to see their financial audits, this has continued under the Biden regime. Just last week the SEC named 5 companies that could be delisted.
The Nasdaq Golden Dragon China index — composed of the US-listed shares of major Chinese companies, including Alibaba and Tencent — has lost 41% in the last month, compared with a 6.8% drop in the S&P 500.