Strategic Vision fund bets on solar after calling China’s private tutoring crackdown

Ken Xu, Hong Kong-based chief investment officer at Strategic Vision Investment Ltd, withdrew from tutoring stocks in March after noting that state-backed media outlets and policymakers were echoing angst among parents about the societal impact of the industry.

Now his flagship US$350 million Value Multiplier Fund is wagering that China’s green ambitions will see renewable energy stocks extend their advance, despite a jump in valuations. The fund returned more than 200 per cent in 2020, and is up about 35 per cent this year versus a gain of just 1.1 per cent for the HFRX China Index that tracks the performance of China-focused hedge funds.

“The global internet is a good trend but it is a little bit mature now,” he said in an interview. “What we are actually more excited about is the energy revolution.”

Underscoring this point, the Hang Seng Tech Index dropped to near a record low Friday while ride-hailing giant Didi Global Inc plans to delist from the New York Stock Exchange amid scrutiny from both American and Chinese regulators.

Xu expects solar power to account for as much as 60 per cent of global electricity generation in the next 20 years, from just 3 per cent last year. He also sees demand for solar energy and solar glass increasing as much as 30 per cent and 45 per cent per year, respectively, over the next few years. This will benefit Xinyi Solar, which makes solar glass, and Sungrow Power, which manufactures power inverters, he said.

Clean-energy has been a popular investment theme globally this year, evidenced by soaring share prices of electric-vehicle makers like Tesla Inc and solar companies including Enphase Energy Inc. The enthusiasm has also been on show in Chinese stocks from lithium battery maker Contemporary Amperex Technology Co to new energy vehicle maker Li Auto Inc, which have both surged.