S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
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Spotify sounding better to analysts as company tunes into profits
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How major US stock indexes fared Wednesday, 2/21/2024
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Germany says Europe's largest economy is in 'troubled waters' and cuts its growth forecast
Range-bound Home Depot stock still is, lower prices ahead
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Palo Alto Networks aims at cyber security leadership
Spotify sounding better to analysts as company tunes into profits
Is Gold Really Boring? (Ad)
3 Reasons the Capital One-Discover merger is a big deal
How major US stock indexes fared Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Germany says Europe's largest economy is in 'troubled waters' and cuts its growth forecast
Range-bound Home Depot stock still is, lower prices ahead
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Palo Alto Networks aims at cyber security leadership
Spotify sounding better to analysts as company tunes into profits
Is Gold Really Boring? (Ad)
3 Reasons the Capital One-Discover merger is a big deal
How major US stock indexes fared Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Germany says Europe's largest economy is in 'troubled waters' and cuts its growth forecast
Range-bound Home Depot stock still is, lower prices ahead
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Palo Alto Networks aims at cyber security leadership
Spotify sounding better to analysts as company tunes into profits
Is Gold Really Boring? (Ad)
3 Reasons the Capital One-Discover merger is a big deal
How major US stock indexes fared Wednesday, 2/21/2024
Is Gold Really Boring? (Ad)
Germany says Europe's largest economy is in 'troubled waters' and cuts its growth forecast
Range-bound Home Depot stock still is, lower prices ahead

Ray Dalio keeps adding to this ETF, what's he thinking?

Ray Dalio stocks

Key Points

  • Ray Dalio has been on a multi-quarter crusade of investing in Asian stocks; this time, he chose a stealthier way to make it happen. 
  • Riding on the tails of a recent jump in Chinese retail sales, two stocks in his ETF are set to boom in the short term.
  • Price action indicates that Goldman Sachs may have made the wrong call this time.
  • 5 stocks we like better than The Goldman Sachs Group

Last quarter, it became evident to thousands of investors just like you just how bullish Ray Dalio had become on Asian markets. Still, while most thought it was a one-time allocation to gain the proper amount of exposure into that section of emerging markets, today, he is proving to be on a much bigger quest.

When these guys buy into an investment thesis or strategy, they typically do so in blocks, making their timing seem impeccable, not to mention they pay multi-million dollar salaries to analysts and other staff to execute these investments, so stealth is high in the request list.

Because of this, it is important to dissect Bridgewater Associates' largest position and the one that called for the most increase in recent months. This one is the iShares Core MSCI Emerging Markets ETF NYSEARCA: IEMG, and the components in this ETF could be a confirmation of the coming year of the dragon for Asian markets.

Reverse engineering 

Asian equities, especially Chinese ones, have been beaten up during 2023. Because of all the geopolitical tensions between Xi Jinping and Joe Biden, most investors have termed China stocks 'uninvestable,' passing on a gold mine of potentially unrealized value to be taken advantage of.

However, it looks like Ray Dalio is again going against the grain, not fearing what other average investors may be avoiding in these companies. By previously buying shares in the iShares MSCI China ETF NASDAQ: MCHI, he directly exposed his investment dollars to Chinese stocks.


But what does that have to do with his newest allocations into the emerging markets ETF? Well, when you look at the top holdings and components within that ETF, it will become apparent to you that Dalio's shopping list carries one clear trend centered around Asian stocks.

Coming at number one, Taiwan Semiconductor Manufacturing NYSE: TSM is the largest holding in this ETF. Coming in second place is Samsung Electronics OTCMKTS: SSNLF, and Tencent Holdings OTCMKTS: TCEHY takes third place. Going down the list, you'll notice that a lot of these holdings are all located in Asia.

Ray Dalio is seeing a bigger trend in one of Asia's most awaited comeback investments, the Chinese consumer. Even the powerbrokers at The Goldman Sachs Group NYSE: GS have had to admit they got the timing wrong after calling for a rally during all of 2023.

If you need to side with one of the two differing opinions, go with Dalio's because he is not getting paid to broadcast his opinion; he is getting paid to make every investment dollar go to war and return to camp with a few prisoners.

The time is near

It seems that Goldman waved the white flag slightly too prematurely, as earnings season demonstrated that the Chinese consumer may return sooner than expected. If you need an aggressive example of why this is so, look at the rally in PDD NASDAQ: PDD after its earnings announcement a couple of weeks back.

With a nearly 30.0% jump in less than a month, PDD set the example for what is happening underneath the Chinese economy's hood. This is backed, of course, by a staggering 10.1% in November, which also had its own trickle-down benefits into other stocks.

The biggest names in China's consumer sector, Alibaba Group NYSE: BABA and JD.com NASDAQ: JD, are also going to inevitably see expanding financials of their own as retail sales push their bottom lines higher.

And that they did; Alibaba posted massive improvements on a year-on-year basis, as their quarterly financials showed, though markets still sold off the stock because management chose to skip its plans of spinning off the Ali Cloud business branch.

Considering that more than two-thirds of the company's revenue comes from Chinese retail and wholesale activities, it would make no sense to see the stock decline as much as it did for a minority segment not spinning off. Think about it: it's not like the cloud business is closing; it just remained as it was.

Dalio knows this and is indirectly exposing himself to the stock. Remember, stealth is high on the request list for these big guys. But Dalio wouldn't be himself if he didn't look to hedge or diversify his risks, which is why he was pleased to see the ETF holds JD.com as well.

So, will this be the year of the dragon? It looks like Dalio is saying yes, while Goldman is saying no; pick your battles wisely, and you might just win the war.

→ Gold Could Be Heading for Record Highs - But How to Play It? (From Edge On The Street) (Ad)

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Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Samsung Electronics (SSNLF)
0 of 5 stars
$40.60flatN/A15.15BuyN/A
Tencent (TCEHY)
3.4171 of 5 stars
$36.74+2.1%0.73%13.03Moderate Buy$210.50
PDD (PDD)
4.1522 of 5 stars
$129.76-1.2%N/A29.16Buy$128.04
Alibaba Group (BABA)
4.384 of 5 stars
$75.58+3.3%1.30%13.94Moderate Buy$115.44
JD.com (JD)
4.7376 of 5 stars
$23.79+2.4%2.52%11.27Moderate Buy$42.00
iShares Core MSCI Emerging Markets ETF (IEMG)N/A$50.62+0.2%2.49%12.26N/AN/A
iShares MSCI China ETF (MCHI)N/A$39.28+2.1%3.62%10.23N/AN/A
Taiwan Semiconductor Manufacturing (TSM)
2.8265 of 5 stars
$125.320.0%1.22%24.19Moderate Buy$128.25
The Goldman Sachs Group (GS)
4.778 of 5 stars
$388.30+1.0%2.83%17.02Moderate Buy$409.93
Compare These Stocks  Add These Stocks to My Watchlist 

Gabriel Osorio-Mazilli

About Gabriel Osorio-Mazilli

  • gosoriomazzilli@gmail.com

Contributing Author

Value Stocks, Asian Markets, Macro Economics

Experience

Gabriel Osorio-Mazilli has been a contributing writer for MarketBeat since 2023.

Areas of Expertise

Value investing, long/short trading, options, emerging markets

Education

CFA Level I candidate; Goldman Sachs corporate training; independent courses

Past Experience

Analyst at Goldman Sachs, associate at Citigroup, senior financial analyst in real estate


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