Billionaire hedge fund David Tepper says he’s loading up on Chinese stocks after nation’s stimulus bazooka base

• David Tepper is growing even more bullish on Chinese stocks amid the nation’s new fiscal stimulus measures.

• The new measures include interest rate cuts, liquidity support and encouraging company share buybacks.

• Tepper sees the Chinese stock market as more attractive than the US because of the difference in valuations.

It’s a time to buy “all in” for Chinese stocks after the country unleashed a bazooka of fiscal stimulus this week, according to billionaire investor David Tepper.

In an interview with CNBC on Thursday, Tepper outlined his bull case for the Chinese stock market, which has basically been left for dead in recent months as it trades at the same level it did in 2007.

“I thought what the Fed did last week would lead to China easing, and I didn’t know they were going to bring out the big guns like they did,” Tepper said, referring to the Federal Reserve’s jumbo basis point of 50 years. interest rate cut last week.

According to Tepper, this big cut gives China’s central bank some breathing room in implementing its own fiscal and monetary stimulus policies.

In recent days, China has cut key interest rates, announced liquidity support for its stock market, reduced bank reserve requirements and even encouraged company share buybacks.

“Encouraging Share Buybacks. Ok, this is China. These are share buybacks. Not just encouraging, but lending money to do it,” Tepper said.

He added: “I understand that they’ve done a lot, they’ve gone above and beyond, and they’ve promised to do more and more and more, and that’s very strange language, especially for any central banker, but especially there ”, referring to the recent dovish. comments from People’s Bank of China Governor Pan Gongsheng.

Chinese stocks responded to the stimulus measures with big moves higher. On Thursday, shares of China’s large-cap technology stocks such as Alibaba, PDD Holdings and Tencent Holdings rose more than 7 percent.

The even broader iShares MSCI China ETF rose 8% on Thursday and is up more than 16% this week alone.

But Tepper believes Chinese stocks have plenty of room to grow, even after recent gains.

“Even with the recent moves, they’re kind of low compared to where they’ve been in the past. And you’re there with a single multiple PEs with double-digit growth rates for large trading stocks. here, Tepper said.

As for whether high tariffs from a potential Donald Trump presidency would shake his bullish view on China, Tepper said it probably wouldn’t matter because of “domestic stimulus” measures.

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“Obviously this is incredibly good for deeply undervalued Chinese stocks, especially when the government is encouraging buybacks,” Tepper said.

In US markets, Tepper said he is not following his “buy everything” mantra with Chinese stocks and is more selective in buying US stocks.

Tepper, who runs the $6 billion hedge fund Appaloosa Management, singled out U.S. casinos with exposure to China, such as Wynn Resorts and Las Vegas Sands, as well as companies with exposure to trade power demand for AI technology as potential purchases.

“I don’t love the US markets from a value point of view, but I’m sure it won’t be short because I’d be nervous as hell about the setup with money easing everywhere, a relatively good economy and just China. massive stimulus coming in, so it would make me nervous not to be somewhat long in the U.S.,” Tepper said.

He added: “You can’t be short in the US.”

Tepper’s largest position as of June 30 was Alibaba, which accounted for 12 percent of his portfolio. He hinted that he was buying more shares.

“I have limits. I probably said a long time ago that I don’t go over 10 percent or 15 percent, well, that’s probably not true anymore,” Tepper said.

Tepper also owns shares of PDD Holdings, Baidu, KraneShares China Internet ETF and JD.com.

As for how Tepper hedges his bullish trade on China, as some might expect a hedge fund to do, it’s not.

“My bet is I don’t care,” Tepper said.

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