As Confidence Returns to Chinese Big Tech, Consider This ETF

Technology seems to be coming back from its 2022 doldrums as the capital markets expect central banks to slow down the pace of rate hikes to keep inflation in check. This is the same for China, which has additional tailwinds for big tech names.

Needless to say, it’s been a rough going for the Chinese tech sector. In addition to the macroeconomic effects of rising inflation, the sector had its own issues isolated to Chinese big tech, such as heavier regulatory measures and a resurgence in COVID-19 cases.

“The Chinese stock market has seen a difficult two years,” an Asia One article said. “Starting with harsh regulatory crackdowns in late 2020, and then followed by strict Covid-19 lockdowns that saw entire cities grind to a standstill, the result was billions of dollars wiped off the books of China’s tech giants and once-promising enterprises.”

Now, the government is easing off from its regulatory measures on big tech. Additionally, lockdown restrictions are also scaling back, allowing the economy to operate at its full capacity.

“However, things are headed for a change,” the article added. “China is attempting to navigate out of its economic troubles by dropping or reversing its pandemic-control policies. Authorities have also largely wrapped up its investigations in the tech sector, and are attempting to instill confidence and clarity by introducing new regulations.”

Re-Up on Chinese Tech With This ETF

The Chinese tech sector is certainly ripe for the picking when it comes to playing a bounce-back. That said, rather than opt for individual holdings, investors can simply get the biggest tech stars in one exchange traded fund: the KraneShares CSI China Internet ETF (KWEB).

KWEB tracks the CSI Overseas China Internet Index and measures the performance of publicly traded companies outside of mainland China that operate within China’s internet and internet-related sectors. KWEB is essentially China’s version of the Nasdaq 100 — the fund provides exposure to the Chinese internet equivalents of Google, Facebook, Amazon, eBay, and the like, all companies that benefit from a growing user base within China and a growing middle class.

When looking at the specific holdings within KWEB, investors will see a “who’s who” of big tech with respect to the Chinese market. This includes giants like Tencent Holdings and Alibaba group — names that could certainly benefit from a renewed economic growth spurt in 2023.

For more news, information, and analysis, visit the China Insights Channel.