Do you think Chinese internet stocks will rally? Consider buying this ETF

China is the most populous country in the world with a growing urban middle class. It is also the world’s second largest economy after the United States. Therefore, growth-oriented investors are watching many Chinese stocks closely.

Due to state interference, stock markets in China have faced severe problems over the past year. Meanwhile, under the Holding Foreign Companies Accountable Act (HFCAA), many Chinese companies are facing radiation in the USA.

Additionally, supply chain disruptions from ongoing COVID-19 related shutdowns and the likelihood of an economic downturn have heightened investor concerns. For example, recent measurements show which is down more than 11% year over year. In early May, Fitch Ratings also cut expected GDP growth for the year.

As a result, Chinese stocks came under prolonged pressure. Since January, the two benchmark indices, the and the , lost 19.9% ​​and 15.5%. By comparison, the

and the have fallen 15.9% and 11.3% so far this year.

Many analysts remain bullish on Chinese tech stocks despite these headwinds, thanks to strong cash flow and enticing double-digit growth prospects. Meanwhile, Chinese President Xi Jinping announcement a leadership commitment to:

“support the healthy development of technology platform companies.”

Examples of Chinese ETFs

There are currently dozens of exchange-traded funds (ETFs) that provide broad access to Chinese stocks:

  • franklin FTSE China ETFs (NYSE:) – 22.1% YTD (YTD);
  • ETF Global X China Biotech Innovation (NASDAQ:) – 32.0%;
  • Global X MSCI China Consumer Disc ETF (NYSE:) – 28.0%;
  • iShares MSCI China ETF (NASDAQ:) – 22.7%;
  • Invesco Golden Dragon China ETF (NASDAQ:) – 29.3%;
  • Rayliant Quantamental China Equity ETF (NYSE:) – 24.7%;
  • SPDR S&P China ETFs (NYSE:) – 22.0%;

As these metrics show, 2022 has been a tough year for long-term Chinese bulls. Today’s article focuses on Chinese internet stocks and an ETF that invests in them.

Chinese internet stocks

With more than a billion Internet users, China is the first the biggest internet market. It is therefore not surprising to see investor interest in Chinese stocks online, especially those in e-commerce.

InvestPro the website provides access to Chinese Internet stocks that can attract long-term investors. For example, among large caps (cap) are e-commerce icons Ali Baba (NYSE:) and JD.com (NASDAQ:); online gambling giant NetEase (NASDAQ:); Internet search as well as the AI ​​giant Baidu (NASDAQ:); social media platform Weibo (NASDAQ:); online discount retailer Vip shop (NYSE:); and Autohome (NYSE:).

Meanwhile, the fastest growing Chinese internet stocks include the social platform JOY (NASDAQ:); Weibo; Ali Baba Holding Group; JD.com; and NetEase.

Investors looking for undervalued Chinese internet stocks may want to research Weibo; Autohome; Baidu; Vip shop; Ali Baba; and travel group Tuniu (NASDAQ:).

Several stocks are currently trading at relatively low price-to-book (P/B) ratios. Examples include Tuniu; media and gaming company Sohu.com (NASDAQ:); JOY; online entertainment name hello group (NASDAQ:); and e-commerce service provider Baozun (Nasdaq 🙂.

Finally, investors who pay attention to analysts’ price targets might be interested to know that several Chinese internet stocks could see significant upside from current price levels. Ali Baba, Baidu, Sohu.com, Weibo, JOYand JD.com are part of these actions.

Naturally, selecting the stocks that best meet individual portfolio goals requires serious due diligence. Thus, retail investors might find it more convenient to invest in an ETF that offers thematic access to the emerging Chinese internet industry.

KraneShares CSI China Internet ETF

  • Current price: $26.68
  • 52 week range: $20.41 – $73.54
  • Spending rate: 0.70% per year

the KraneShares CSI China Internet ETF (NYSE:) invests in Chinese Internet companies listed overseas, primarily in the United States as well as in Hong Kong (HK). He follows the .

KWEB, which was launched in July 2013, currently holds 47 shares. In terms of sector allocations, we see Consumer Discretionary (43.7%), Communication Services (41.8%) and Industrials (4.1%), among others.

In 2022, the ETF amended weightings for listing locations to mitigate the potential impact of HFCAA legislation and delisting in the United States. Today, more than two-thirds of shares are listed in Hong Kong (HK). Next come Chinese companies listed in the United States (26.2%). And finally, more than 5% of the names are likely to have a listing in Hong Kong soon.

The top 10 holdings account for nearly two-thirds of the $5.4 billion in net assets. Among these are Tencent (OTC:), which owns a range of businesses in games, social media and fintech; Ali Baba; JD.com; Baidu; and the name of the delivery on request Meituan (OTC:).

KWEB hit an all-time high on June 1, 2021. But what a difference a year has made. Since January, the fund has lost 26.8% and 61% over the past 12 months. It hit a 52-week low on March 15.

Long-term investors looking to generate returns from the growing domestic consumption habits of China’s growing middle class should consider further researching the fund. Most of the potentially harmful news has probably been priced in the KWEB ETF.

Comments are closed.