For investors looking at the long-term case for China tech investing, the U.S.-China “chip war” has loomed large. The specter of ongoing and potentially worsening trade battles between the two countries has put a damper on tech outlooks in the East Asian nation. That said, China not only remains a key pillar in investor allocations as a strong outlet for foreign equities, it also may not be as negatively impacted as trade war headlines might suggest.
For one thing, investors may want to acknowledge that even as limits on chips grow, U.S. firms may still be receiving permission to sell to China. Per China Beige Book Co-Founder and CEO Leland Miller, the chip war looks more like a pillow fight with the so-called ban acting more like a licensing regime. So, while the politics of a chip war are serving their purpose, there is still business to be done.
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As part of that licensing regime, Nvidia (NVDA) appears set to launch a China-focused AI chip in the second quarter this year. While it may not be as high-powered as other chips that were previously available, it can still meet some part of market demand in the nation’s massive economy. Finally, with China’s industrial policy embracing domestic chip manufacturing, the country’s tech investing can still bear fruit.
Ride Out the Chip War With KWEB
The outlook looks better than headlines might suggest for an ETF like KWEB, for example. The KraneShares CSI China Internet ETF (KWEB) will hit its 10-year ETF anniversary in July, charging 69 basis points for its approach.
The strategy tracks the CSI Overseas China Internet index, investing in Chinese software and information tech firms. While some of those companies have faced recent challenges, long term, it remains one of the only options investing in both the well-known Chinese tech names and up-and-comers, too. For investors looking to address the chip war in their China investing, KWEB may be one option to watch.
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