“We believe Chinese consumers may be beginning to spend more confidently as a result of gains they have experienced from the capital markets. As Chinese consumers spend more money, they are increasingly doing so online. Over the same time period, the national online retail sales of goods and services reached $168 billion dollars, an increase of 40.9% year-over-year. Online retail sales now comprise 11% of total retail sales,” said KraneShares.
The issuer notes that China’s retail sales boom is correlated with the surge in its onshore, or A-shares, equity markets. Earlier this week, A-shares ETFs, including the KraneShares Bosera MSCI China A ETF (NYSEArca: KBA), surged after FTSE Russell said it will transition A-shares into global benchmarks.
MSCI is expected to make its announcement regarding A-shares classification on June 9. If it follows suit with FTSE Russell, A-shares ETFs could surge some more taking KWEB along for the ride. Even with Thursday’s 6.5% tumble, KBA is up 39.3% this year, making it one of the year’s top-performing non-leveraged ETFs. [FTSE to Move A-Shares Into Global Benchmarks]
“We looked at the current asset levels of all the index funds and ETFs that benchmark to the MSCI indices that will be affected by the definition change as of 4/30/2015. We calculated that once U.S-listed Chinese companies are included into these funds there could be an inflow of $10 billion into the fifteen largest U.S-listed Chinese stocks,” according to KraneShares.
KraneShares CSI China Internet Fund
