AS Chinese technology stocks experience one of their toughest years in recent memory, Dawid Krige is keeping faith with the nation’s beaten-down equity stars.

His London-based Cederberg Capital Ltd. bought more of Alibaba Group Holding Ltd. and Tencent Holdings Ltd. in August, stocks he once said were fit for his children’s college fund but have now slumped more than 16 percent since mid-June. His long-only fund is still among the top performers investing in greater China equities over the past year, with a 27 percent return through July.

“Most of the current drivers — be it Trump and tariffs and Turkey, as well as the deleveraging — are probably more of a transient nature,” Krige said. “But Chinese equities have never been up in a straight line and have tended to be very volatile. We think it’s a great time for long-term investors to be buying.”

Cederberg Capital thrived on a strategy that encapsulated the heady days of 2017, staking large bets on tech and consumer giants such as Alibaba, Tencent and Kweichow Moutai Co., the beneficiaries of a burgeoning middle class. That started going south this year as economic momentum cooled amid the unresolved U.S.-China trade conflict. As of Aug. 29, the fund had negative returns last month.

A question for investors now is whether this is just a blip in the wider China story, and can they stomach the volatility and sit tight.

For Krige, the answer is yes. He can afford a long-term view because his investors do. With a US$100,000 minimum investment, the fund mostly attracts institutions and wealthy families. The performance fee’s hurdle rate is calculated on a rolling three-year basis, and new share classes mandate a three-year lockup. His funds have seen net money inflows this year, he said.

Even as the U.S.-China trade tensions whipsaw Chinese markets, Krige said he hasn’t sold any of his holdings. (SD-Agencies)