Krane Funds Advisors is the advisor to the KraneShares CSI Five Year Plan ETF and the KraneShares CSI China Internet ETF. Enclosed is a weekly update of China’s economic and capital markets activity that was assembled by KraneShares and its Shanghai based partner, CapitalVue. Please contact us if you have any questions or comments.

Major News and Events:

China Celebrates Lunar New Year – The Year of the Horse:

China began celebrations for Lunar New Year on January 31. Considered by many Asians to be the most important festival of the year.  Public holidays vary from three days in Hong Kong to 10 days in China.

This year Chinese people are leaving home in greater numbers than ever, with some 200 million more traveling over the 40-day Lunar New Year holiday period compared to last year. That means an estimated 3.6 billion trips will be taken over the holiday, which began on January  16, many by Chinese flocking home to celebrate Lunar New Year with their families.

Lunar New Year is considered to be the world’s largest annual human migration. An estimated 225 million Chinese will also travel overseas during the Lunar New Year, about 10% more than last year, according to the China Tourism Academy with Australia recently becoming the top destination for the wealthiest travelers.

New Zealand Sees Exports of Consumer Products to China Rise:

In a sign of China’s rising consumer product demand, New Zealand’s exports to China rose 45 percent last year thanks to soaring demand for milk powder, supplanting Australia as New Zealand’s top export market for the first time on an annual basis.

Figures recently released by Statistics New Zealand show that in 2013, China imported $8.1 billion worth of New Zealand goods, up from $5.6 billion the previous year. About 40 percent of those imports were of milk powder.

The strong demand from China has helped boost New Zealand’s economic growth to 3.5 percent, stronger than in most developed nations.

BTC China Bitcoin Exchange Back in Business:

BTC China, the world’s largest bitcoin exchange, has started allowing users to purchase the digital currency with Chinese yuan again according to The Wall Street Journal. This is significant because BTC China stopped accepting deposits in renminbi last month after the People’s Bank of China issued a memo warning national financial institutions not to trade in bitcoin. That decision triggered a quick and massive drop in its value.

The exchange started accepting renminbi again on Thursday after studying the PBOC memo and determining that it was legal to accept deposits and transfer money into customer accounts, even though the banks that manage those accounts can’t conduct business in bitcoin. BTC China has not made an official announcement and according to  the WSJ report, timed the change to coincide with the Lunar New Year  holiday, when trading volume is low.  BTC China’s CEO, who recently closed a $5 million Series A round from Lightspeed China Partners and Lightspeed Venture Partners, said it is treading carefully because the Chinese government can change its policies at any time.