Three Underrated China Stocks in KWEB | ETF Trends

Underrated, or lesser-known — whichever the case — there are China stocks to be excited about in an otherwise complicated year for China investing. An allocation to China still offers significant advantages to portfolios, diversifying away from an expensive, inflationary U.S. economy. There are plenty of opportunities in China equities that have done well this year, too, with three specific examples of overlooked China stocks available in the KraneShares CSI China Internet ETF (KWEB).

KWEB tracks the CSI Overseas China Internet index, offering pure-play exposure to Chinese information and software firms. Investing for a 69 basis point (bps) fee, the strategy includes well-known megafirms like Alibaba and Tencent. It also includes lesser-known China stocks that have done well YTD that merit a closer look.

TAL Education Group (TAL)

TAL provides smart learning solutions for Chinese students. Per YCharts, the firm had initially focused on K-9 academic tutoring after school, but regulatory changes have pushed the firm toward learning technology and enrichment instead. Despite that regulatory change and spinning off of its main business in 2021, TAL has performed well this year. The firm has returned a robust 72% YTD, per YCharts. The stock exhibits high institutional ownership, offering stable control of the firm’s direction.

See more: “This China ETF Has Long-Term Allure

NetEase Inc (NETTF)

NetEase, an online services provider in China, works on mobile and online games, cloud music, media, live streaming, and more. It partners with major names in entertainment like Blizzard Entertainment and Mojang. That makes it an intriguing consumer play outside of broader consumer-focused e-commerce firms given its focus on a games-oriented niche. NETTF has returned 41.3% this year, per YCharts, with strong fundamentals, too. Group Ltd (TCOM)

Finally, KWEB also holds stock from Group. TRPCF is the “largest” online travel agent in China, which generated about 78% of sales from reservations and transportation tickets in 2020. It previously generated a significant one-fourth of revenue from international business. As China moves forward, it could be set to benefit from a further post-COVID travel push.

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