Much to the chagrin of hopeful short sellers, momentum stocks and exchange traded funds are bouncing back, eating away at the steep losses incurred during the March/April swoon.
Chinese Internet stocks are participating in the momentum rebound trade as highlighted by the recent performance of the KraneShares CSI China Internet Fund (NasdaqGM: KWEB). KWEB’s net asset value surged 6.1% last month amid a spate of successful Chinese Internet initial public offerings and an earnest rebound for some momentum sectors. [China Internet ETF Soaring in May]
Like other ETFs with ties to Internet and social media stocks, KWEB was taken to task during the momentum sell-off. From its March peak to its May trough, the ETF tumbled 26.1%. However, KWEB has surged 10% in just the past month.
Over that time, KWEB is the best-performing China ETF, outpacing the largest China ETF, the iShares China Large-Cap ETF (NYSEArca: FXI), by 100 basis points.
Renewed ebullience toward Chinese Internet IPOs ahead of Alibaba’s listing, which could arrive in August, has been a positive catalyst for KWEB. Retail site JD.com (NasdaqGS: JD) raised $1.78 billion in May while social media firm Weibo (NasdaqGS: WB) raised $285.6 million in April, according to Bloomberg.
Shares of Weibo are up almost 7% in the past month while JD.com has surged 36% since its May 22nd IPO. Beauty products retailer Jumei International (NYSE: JMEI) is up 65 since its May 16th IPO.
While none of those stocks are yet members of KWEB, those performances ahead of the Alibaba IPO are seen as positives for the e-commerce giant and that positivity has trickled down to KWEB. KWEB could be among the first ETFs to add Alibaba to its lineup as the fund’s underlying index could add the stock after its eleventh trading day. [These ETFs Will House Alibaba]
Highlighting the intensity of the recent rally for KWEB’s holdings is Qihoo 360 Technology (NasdaqGS: QIHU). The provider of Internet and mobile security is the worst performer of KWEB’s top-five holdings over the past month, but the stock is up 9.5% over that time.
KraneShares CSI China Internet Fund
