We spoke a bit about broad based China Equity index ETFs yesterday as well as a brief mention about BABA which quickly and impressively reversed its short term losing streak on headlines of the company expanding its presence in the “Cloud Services” market (i.e. potentially challenge AMZN here in the U.S.).
BABA of course only saw its initial public offering back in late September of last year, and from a simple technical analysis standpoint one cannot even see a 200 day Moving Average in the stock currently because it simply lacks that historical data up until this point.
That has not stopped BABA however from becoming an important component in several ETFs that if not on current radars, should likely be added due to their increase in visibility in terms of trading volume and asset growth.
KWEB (KraneShares CSI China Internet, Expense Ratio 0.68%) debuted in July of 2013, and will be celebrating its second year of live performance this summer of course, and the fund has seen a notable uptick in trading volume lately (several >750k share trading days versus ADV of about 155,000 shares).
Year to date there has been some evident position trimming in KWEB based on visible redemption activity (->$100 million out), leaving the fund with about $136 million in assets under management currently.
With BABA stock coming back to life and weighing in as the third largest holding in KWEB (>8.1% weighting) behind JD (8.5% weighting) and Tencent Holdings Ltd. (>10.3% weighting), KWEB may remain in heavy rotation in the near term on BABA alone, if not because of the recent shakeup across the Chinese equity market itself (FXI (iShares China Large Cap, Expense Ratio 0.74%) remains mired in a three day losing streak as of the time of this publication).
Another KraneShares ETF, KFYP (China Five Year Plan ETF, Expense Ratio 0.68%) should be more sensitive to BABA given its higher weighting to the stock (12.11% weighting, #3 component in the index) but the fund remains rather small in AUM size ($3.2 million in AUM) with daily trading volume that can be hit or miss. Several other funds have exposure to BABA as well, specifically FPXI (First Trust International IPO, Expense Ratio 0.70%, 7.81% weighting,) IPO (Renaissance IPO ETF, Expense Ratio 0.60%, 7.35% weighting), and CQQQ (Guggenheim China Technology, Expense Ratio 0.70%, 6.13% weighting).
KraneShares CSI China Internet Fund
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