Ark Invest’s Cathie Wood said her flagship innovation fund has reduced its China exposure to zero as the developing market faces an economic slowdown.

The tech investor revealed that her Ark Innovation ETF, with nearly $9 billion assets under management, according to Morningstar, has exited the stocks that generate revenue from China as she consolidated her portfolio toward her favorite bets like Tesla, Coinbase, Roku and Zoom in the market downturn.“As we always do during bear markets, we concentrated our strategies towards our highest conviction names and the Chinese names, in particular, came out one by one as we were concentrating so that now, at least in the flagship strategy, we do have no exposure to China,” Wood said in a prerecorded investor webinar Thursday.

ARKK used to own shares in Chinese tech giant Tencent and property site KE Holdings. Wood said her exposure to China and other emerging markets reached about 25% in 2020 as she was impressed by China’s initial response to the Covid pandemic.

“We were looking at the fiscal and monetary policy responses around the world and were impressed with China’s restraint. They were not throwing money at the problem. They were very disciplined in terms of their monetary and fiscal policy responses,” Wood said.

The innovation investor said she changed her stance on China after Beijing started to tighten its grip on the economy by cracking down on the ultrawealthy and the tech sector.

The widely followed investor said she’s particularly concerned about China’s real estate market as the country incurred massive amounts of debt after over a decade of swift expansion.

“It was responsible for roughly 15 years of double-digit real GDP growth ... and growth like that can cover a lot of sins,” Wood said. “And those sins usually involve debt, and importantly in the property space, we do believe that China is facing its day of reckoning in this regard.”

Ark Fintech Innovation ETF (ARKF) still owns a small stake in Chinese e-commerce company JD.com, but it has dumped other Chinese names like Pinduoduo and Tencent.

Still, Wood said she might add back shares tied to China as the country overcomes the challenging period and the market enters a new bull cycle.

“More diversification during bull markets, especially as we get more IPOs and as we reconsider some of the names that we let go in our concentration strategy,” Wood said.

Her flagship fund has had a banner year so far as her top holdings rebounded from sharp losses triggered by rising rates. ARKK is up more than 50% in 2023.