Market-Beating China Fund Manager Favors Scooters and Spicy Sauce Over Tech

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Michelle Leung's Xingtai Capital avoids companies that have yet to turn a profit and doesn't hold stocks in Chinese internet giants, including Alibaba and Tencent

HONG KONG—Michelle Leung is used to standing out, as a China-focused stock picker who doesn’t follow the crowd and as a top female professional in the male-dominated fund-management industry.

She is the founder of Xingtai Capital Management Ltd., a firm with offices in Hong Kong and Shanghai that oversees around $600 million in assets and counts institutions from the U.S., Europe and Asia as investors. As of May, the firm’s flagship Xingtai China Fund generated an annualized 33.9% return in the past five years, net of fees. That is more than double the 14.5% return on its benchmark, MSCI Inc.’s China index.

The performance gap is even wider this year. For the first five months of 2021, the fund’s return was 16.3%, compared with MSCI China’s 1.7%. Ms. Leung has a somewhat unconventional approach to stock selection. Xingtai avoids companies that have yet to turn a profit, putting swaths of China’s popular technology sector off-limits. The fund also doesn’t hold stocks of the country’s internet giants, including Alibaba Group Holding Ltd. and Tencent Holdings Ltd.

 

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