Michael Burry, the investor famous for predicting the 2008 housing crash, is doubling down on Chinese equities while betting against the Nasdaq-100. For anyone questioning the relentless U.S. technology rally, that sets up a potential contrarian trade worth a look.
He increased his position in Chinese electric vehicle maker BYD (OTC: BYDDF). He also holds JD.com (NASDAQ: JD), Tencent (OTC: TCEHY), Meituan and Haidilao, calling Hong Kong stocks undervalued, according to Oninvest. He has avoided Alibaba Group Holding Ltd (NYSE: BABA), due to its stock issuance to fund AI infrastructure, Michael Burry's Stock Tracker posted on X.
Meanwhile, Burry has consolidated his bearish bets into put options on the Nasdaq-100 and the VanEck Semiconductor ETF (NASDAQ: SMH).
For ETF investors, the divergence raises a question: Could Chinese equities offer an alternative to crowded U.S. technology trades?
China ETFs Offer Different Ways to Play the Trade
The KraneShares CSI China Internet ETF (NYSE: KWEB) offers targeted exposure to Chinese internet companies, including Tencent, JD.com and Alibaba. The fund currently holds approximately $4.50 billion in net assets and charges a 0.69% annual expense ratio. Its Alibaba exposure, however, differs from Burry's selective approach.
For broader exposure, the iShares MSCI China ETF (NASDAQ: MCHI) holds approximately $5.90 billion in net assets. Its portfolio spans technology, financials and consumer businesses, with a 0.59% expense ratio. The fund's net asset value total return was down 12.74% year to date through Oct. 1, underscoring the risks of betting on a recovery.
Investors seeking a more technology-heavy alternative can consider the Invesco China Technology ETF (NYSE: CQQQ). It was down 19% year-to-date, compared with MCHI's 15% decline at that time. Their performance highlights that a broad and a technology-focused China trade can remain volatile even when investors see long-term value in the sector.
Together, the funds offer three distinct approaches: replicating Burry's internet-stock theme, diversifying across Chinese equities or concentrating on technology. But his stock picks do not guarantee a recovery, and the ETFs' different holdings mean none precisely replicates his portfolio.
Burry's positioning highlights the valuation gap investors may see between Chinese equities and U.S. technology stocks. But geopolitical tensions, regulatory uncertainty and economic weakness remain risks.
