Chinese technology-related ETFs led the charge on Thursday after Internet giant Baidu (NasdaqGS: BIDU) revealed better-than-expected third quarter results and the U.S. and China were moving toward reconciliation.
China tech-heavy ETFs were among the best performers on Thursday, with the Invesco Golden Dragon China ETF (NasdaqGM: PGJ) up 2.4%, Invesco China Technology ETF (NYSEArca: CQQQ) 2.4% higher, KraneShares CSI China Internet Fund (NasdaqGM: KWEB) gaining 2.3% and Global X MSCI China Communication Services ET (CHIC) up 2.7%.
Despite facing a number of headwinds like a slowing Chinese economy, a protracted trade war, increased regulatory scrutiny and greater competition, Baidu has been diversifying revenues and reduced its reliance on the core search business by expanding into areas like driverless cars, artificial intelligence and streaming, CNBC reports. Driverless cars and artificial intelligence are viewed as future growth areas for the company while its video platform iQiyi is already delivering.
Specifically, revenue from its iQiyi division hit 7.4 billion yuan, or $1.04 billion, up 7% year over year, with subscriptions jumping 31%.
“Our focus to combine search and feed and expand Baidu App’s content and services offerings is improving user experience and drawing publishers and service providers to place more content and services on Baidu’s hosted platform, which in turn draws more users,” Robin Li, chairman CEO of Baidu, said in a statement.
Baidu shares surged 13.1% on Thursday. BIDU makes up 9.4% of CHIC’s underlying portfolio, 7.7% of PGJ, 6.8% of KWEB and 6.7% of CQQQ.
Further adding to the risk-on mood, China’s Commerce Ministry said China and the U.S. have agreed to lift some tariffs in stages if the two countries reach a partial trade deal, the Wall Street Journal reports.
“If the phase-one deal is signed, China and the U.S. should remove the same proportion of tariffs simultaneously based on the content of the deal,” spokesman Gao Feng said at a regular press briefing Thursday. “This is what [the two sides]agreed on following careful and constructive negotiations over the past two weeks.”
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