(Bloomberg) — Cathie Wood’s Ark Investment Management has been selling Chinese tech stocks, with holdings in one of the firm’s funds falling to the lowest on record as Beijing’s crackdown on the sector intensifies.

China’s weighting in Wood’s flagship Ark Innovation ETF has plunged to less than 1% from 8% as recently as February, while that of the Ark New Generation Internet ETF has fallen to 5.4%, the lowest compared to month-end figures since Bloomberg began compiling the data in October 2014. The China weighting in Ark’s fintech ETF has remained steady at around 18%.

“I do think there’s a valuation reset,” Wood, Ark’s founder and chief executive officer, said in response to questions on the outlook for larger Chinese tech firms during a monthly webinar with investors on Tuesday. “From a valuation point of view, these stocks have come down and again from a valuation point of view, probably will remain down.”

The paring of Chinese tech holdings by one of the world’s biggest thematic fund providers underscores how the sector is losing its allure as Beijing increases scrutiny of the industry’s data collection and offshore listings. Many investors are wary of calling a bottom, even as a gauge of China’s internet companies has rebounded in recent days after losing over $1 trillion of market value since mid-February.

Ark’s falling exposure to China reflects both reduced stakes in bellwethers such as Tencent Holdings Ltd. as well as declining valuations. An Ark representative declined to comment on the firm’s holdings.

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

(305) 707 0888