18/08/2025

BIZ & FINANCE MONDAY | AUG 18, 2025

18

Hedge funds shift bets to double down on Big Tech

Modi’s tax overhaul to strain finances but boost image NEW DELHI: Indian Prime Minister Narendra Modi’s deepest tax cuts in eight years will strain government revenues but are winning praise from businesses and political pundits who say they will bolster his image in an ongoing trade fight with Washington. In the biggest tax overhaul since 2017, Modi’s government on Saturday announced sweeping changes to the complex goods and services tax (GST) regime which will make daily essentials and electronics cheaper from October, helping consumers and also firms like Nestle, Samsung and LG Electronics. At the same time, in his Independence Day speech on Friday, Modi urged Indians to use more goods made domestically, echoing calls from many of his supporters to boycott US products after Donald Trump hiked tariffs on imports from India to 50% as of Aug 27. The tax cut plan comes with costs given GST is a major revenue generator. IDFC First Bank says the cuts will boost India’s GDP by 0.6 percentage points over 12 months but will cost the state and federal government US$20 billion annually. But it will improve weak stock market sentiment and bring political dividends for Modi ahead of a critical state election in the eastern state of Bihar, said Rasheed Kidwai, a fellow at New Delhi-based Observer Research Foundation. “GST reduction will impact everyone, unlike cuts to income tax, which is paid by only 3%-4% of the population. Modi is doing this as he is under a lot of pressure due to US policies,” said Kidwai. “The move will also help the stock market, which is now politically important as it has a lot of retail investors.” India launched the major tax system in 2017 that subsumed local state taxes into the new, nationwide GST to unify its economy for the first time. But the biggest tax reform since India’s independence faced criticism for its complex design that taxes products and services under four slabs - 5%, 12%, 18% and 28%. Last year, India said caramel popcorn would be taxed at 18% but the salted category at 5%, triggering criticism about a glaring example of GST’s complexities. Under the new system, India will abolish the 28% slab – which includes cars and electronics – and move nearly all of the items under the 12% category to the lower 5% slab, benefitting many more consumer items and packaged foods. Government data shows the 28% and 12% tax slabs together garner 16% of India’s annual GST revenue of roughly US$250 billion last fiscal year. A recent survey by the VoteVibe agency showed Modi’s opposition has an edge largely because of a lack of jobs. “Any tax cut has wide public appreciation. But of course, the timing is purely determined by political exigencies,” said Dilip Cherian, co-founder of Indian PR firm Perfect Relations. “It seems to be an indication of some mixture of frustration as well as recognition that there is a broad public pushback against high and crippling rates of taxation.” Modi has vowed to protect farmers, fishermen and cattlemen, following Trump’s surprise tariff announcement on India, after trade talks between New Delhi and Washington collapsed over disagreement on opening India’s vast farm and dairy sectors and stopping Russian oil purchases. The latest round of trade talks between the two nations set for Aug 25-29 has also been called off. – Reuters

Michael Burry’s Scion Asset Management also unveiled bets on the insurer, while Soros Fund Management boosted an existing position. Shares in UnitedHealth are down 46% this year, as the company faces rising costs, a US Department of Justice probe, a cyberattack and the shooting of former top executive Brian Thompson last December. The fund’s positions were revealed in quarterly securities filings known as 13Fs. While backward-looking, these filings typically reveal what funds owned on the last day of the quarter and are one of the few ways hedge funds and other institutional investors have to declare their positions. Bridgewater added more shares in Nvidia, Alphabet and Microsoft in the second quarter. The macro hedge fund founded by Ray Dalio more than doubled its bets in Nvidia. It ended June with 7.23 million shares in the chipmaker, or 154.5% more than it had at the end of March. Nvidia was Bridgewater’s biggest bet in a single stock, totaling US$1.14 billion (RM4.8 billion). Its holdings in Alphabet and Microsoft went up by 84.1% and 111.9%, respectively, amounting to US$987 million and US$853 million. Other AI-related stocks added were Broadcom (+102.7%), to 317.8 million shares, or US$317 million, and Palo Alto Networks (+117%), to 313.8 million, or US$314 million. Discovery Capital, whose founder Rob Citrone has recently been bullish on Mexico’s America Movil due to its exposure to Latin America, doubled its stake in the wireless

provider during the second quarter. For the quarter ended June 30, the fund amassed another 2.65 million shares, valuing its current holding in America Movil at about US$95 million. Citrone’s hedge fund, which generated a 52% windfall on its investments last year, has increased its exposure to Latin America as part of a strategy to diversify from US holdings. During the quarter, Discovery increased its holdings in Big Tech, as it more than doubled its stake in Meta Platforms , the parent company of Facebook, while also betting on booming demand for AI as it took a new position in Nvidia-backed cloud provider CoreWeave. The hedge fund also increased its position in UnitedHealth by 13%. Tiger Global Management bought more stocks in some Magnificent Seven companies in the second quarter, including Amazon, Alphabet, Nvidia, Microsoft and Meta, its 13Fs showed. Chase Coleman’s hedge fund added roughly 4 million shares of Amazon and ended June with 10 million shares, worth US$2.34 billion. The fund also increased its bets in smaller AI-players. It added over 800,000 shares in chip-making equipment supplier Lam Research Corp, ending June with 5.26 million shares, valued at US$512 million. Many changes in Philippe Laffont’s Coatue Management portfolio were also around AI-related stocks. It unveiled new positions in both Arm Holdings and Oracle, adding stakes worth roughly US$750 million and US$843 million, respectively. – Reuters

NEW YORK: Wall Street’s largest hedge funds, Bridgewater Associates, Tiger Global Management and Discovery Capital, increased their exposure to Big Tech in the second quarter amid a generational boom in the growth of artificial intelligence. During the June quarter, hedge funds cut their exposure to laggards in industries like aerospace and defence, and consumer and retail, as part of a broader move back to momentum investing. It marks a big shift from earlier this year when bets on Big Tech had soured for top money managers due to tariff-fueled volatility in financial markets, with investor concerns around rising inflation and fears of a bubble in AI triggering a sell-off in “Magnificent Seven” stocks. Since then, tech stocks have staged a big comeback. The S&P 500 is up 10% so far this year, buoyed largely by the largest tech companies, which account for nearly a third of the combined market cap of companies on the index. Outside technology, some hedge funds, such as Lone Pine and Discovery, also bet on UnitedHealth Group. Berkshire Hathaway and o Money managers cut exposure to laggards in aerospace, defence, consumer and retail

Nvidia CEO Jensen Huang delivering the first keynote speech of Computex 2025 in Taipei. – AFPPIC

OpenAI staff said to be looking to sell US$6b in stock to SoftBank, others TOKYO: Current and former employees of OpenAI are looking to sell nearly US$6 billion worth of the ChatGPT maker’s shares to investors including SoftBank Group and Thrive Capital, a source familiar with the matter told Reuters. The potential deal would value the company at US$500 billion, up from US$300 billion currently, underscoring both OpenAI’s rapid gains in users and revenue, as well as the intense competition among artificial intelligence firms for talent. SoftBank, Thrive and Dragoneer Investment Group did not immediately respond to requests for comment. All three investment firms are existing OpenAI investors. Bloomberg News, which had earlier reported the development, said discussions are in early stages and the size of the sale could change. The secondary share sale investment adds to SoftBank’s role in leading OpenAI’s US$40 billion primary funding round. Bolstered by its flagship product ChatGPT, OpenAI doubled its revenue in the first seven months of the year, reaching an annualised run rate of US$12 billion, and is on track to reach US$20 billion by the end of the year, Reuters reported earlier in August. Microsoft-backed OpenAI has about 700 million weekly active users for its ChatGPT products, a surge from about 400 million in February. – Reuters