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Ark Invest's Cathie Wood has high hopes for Chinese stocks in the long run — and says her fund's analysts were blown away by Tesla's AI day

Cathie Wood, CEO and chief investment officer of ARK Invest, on a purple background with the Ark Invest logos patterned behind her.Ark Invest; Insider

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Cathie Wood is positive about China stocks in the long term, and revealed in a recent interview that Ark Invest's analysts were blown away by Tesla's AI Day.

"I'm not pessimistic about China longer run because I think they're a very entrepreneurial society," she said on Bloomberg Radio in a Tuesday interview. "Sure, the government is putting more rules and regulations in. But I don't think the government wants to stop growth and progress at all."

"What I will say though is I'm a little more optimistic about the United States than other economies, so it's more of a relative sort of thing," she said, adding that the more insular China becomes, the less competitive it could be in specialised areas like artificial intelligence.

Ark Invest disclosed on Monday that it had reinvested in JD.com, after rapidly shedding its exposure to Chinese stocks due to Beijing's ongoing regulatory crackdown. Wood purchased more than 150,000 American Depositary Receipts in the e-commerce group after it reported robust second-quarter earnings.

Wood told Bloomberg that Ark sorted through the companies that are doing things the Chinese government likes, and is focusing its investments in companies focused on logistics, manufacturing, and groceries. Logistics makes up a big part of JD.com, she said.

"That's probably been our biggest purchase, as well as Pinduoduo for the same reason," she said. "We were really swapping them out of other names that we think are going to continue to be in harm's way or certainly under government pressure, like Alibaba."

Wood, who gained recognition for the strong performance of her funds in 2020, dumped Chinese stocks in July after Beijing cracked down on the tech and education sectors. But she defended China's move in the interview, saying its authorities are doing many of the same things that other governments around the world are.

"Most governments are concerned about data privacy, national security, and even concerned in some ways about the impact of social media," she said.

The fund manager also noted that Ark's analysts were "blown away" by Tesla's AI day, during which Elon Musk unveiled plans for a human-like robot that is meant to perform repetitive tasks and drive labor costs down over time.

Tesla is one of Wood's highest-conviction bets and is among the top holdings in her flagship fund, the ARK Innovation ETF.

"Every passing day, especially the more we learn about their AI expertise and how they're really driving the space so to speak much faster than I think anyone else is right now," she said. "We believe they have the pole position."

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