Greed & Fear To Sell 4% Of This India Stock, 1% In This Delivery Company To Bet Big On Tencent; Others

Jefferies' "Greed & Fear" strategy is making bold moves, capitalizing on Tencent’s recent 8.8% share price decline following US Department of Defense blacklisting.

Maintaining confidence in the Chinese tech giant, Greed & Fear has increased its stake in Tencent by 4% in its Asia ex-Japan long-only portfolio, funding this shift by divesting from State Bank of India (SBI).

A Calculated Risk: Tencent Over State Bank of India
‘GREED & fear certainly has no intention of removing either stock from GREED & fear’s portfolios. CATL is in two of GREED & fear’s long-only portfolios and Tencent in one,’ as mentioned in the report.

Tencent’s biggest-ever share buyback, spending HK$1.5 billion to repurchase 4.05 million shares, underscores its resilience despite regulatory pressures​.
This reallocation reflects the fund's conviction that Tencent remains a strong long-term play. S

Similarly, the stake in Meituan has grown by one percentage point, while Zomato ’s share has been trimmed. Zomato, once a stellar performer with an 87% rise since its IPO , faces short-term profitability challenges amid rising competition, as highlighted by Jefferies’ Vivek Maheshwari in his latest downgrade report​.

Navigating the AI Frenzy
Beyond portfolio reshuffles, Greed & Fear's cautionary stance on AI investments resonates amidst market euphoria. While Nvidia and Alphabet have soared 859% and 120% since early 2023, concerns loom over hyperscalers’ massive capex spending, with Microsoft committing a staggering $80 billion to AI data centers in 2024 alone​. Historical parallels to the dot-com bubble evoke questions about whether AI returns will materialize as anticipated or face prolonged timelines.

Global Shifts and Strategic Adaptations
Geopolitical dynamics further complicate investment decisions. The Trump administration’s return has stirred debates on tariffs, with a potential 10-20% levy on European goods, adding to the tension between the US and China​.

Yet, Greed & Fear views Trump's presidency as an opportunity for Chinese companies like CATL to signal their willingness to localize production, exemplified by CEO Robin Zeng’s proposal to build a US factory​.

‘Still, the negative point remains that Europe faces all the above structural challenges at a time when US President-elect Trump has threatened the EU with a 10-20% tariff on all EU goods,’ reads the report.

In Europe, political and economic uncertainties, including Germany's deindustrialization crisis and shifting fiscal policies under CDU leader Friedrich Merz, weigh on sentiment. Meanwhile, European equities, trading at a 39% discount to U.S. counterparts, present a contrarian opportunity if fiscal constraints are eased​.

The Road Ahead
With an eye on market volatility and long-term fundamentals, Greed & Fear's tactical adjustments showcase a blend of pragmatism and ambition. Tencent’s strategic buyback, Zomato’s recalibration, and the avoidance of hyperscaler risks highlight a portfolio designed for resilience in uncertain times.