KraneShares CSI China Internet ETF (KWEB US)
The KraneShares CSI China Internet ETF tracks a foreign equity index composed of overseas-listed Chinese Internet companies.
Net Assets is $1.725 billion.
KWEB Provides:
• Access to Chinese internet companies that provide similar services as Google, Facebook, Twitter, eBay, Amazon, etc.
• Exposure to companies benefitting from increasing domestic consumption by China's growing middle class.
• Exposure to Chinese internet companies listed in both the United States and Hong Kong
China Internet Sector Highlights:
• Chinese E-Commerce sales reached $749 billion in 2016 (compared to $394.9 billion in the U.S.) an increase of 26.2% year over year.
• China's internet population reached 721 million people, a penetration of only 52.2%. The U.S. internet population reached 287 million people, a penetration rate of 88.5%.
• Total Chinese retail sales reached $4.8 trillion in 2016, an increase of 4.4%. Online shopping accounted for 15.5% of retail purchases in China in 2016.
Data from National Bureau of Statistics in China. Link: https://kraneshares.com/kweb/
China has been a rewarding place to be among emerging markets, but a truly rewarding slice of the China economic pie has been internet stocks.
There are fundamental factors supporting KWEB's ascent. As is widely known, China is the world's largest internet market, with more internet users than the U.S. has citizens, and China has been the largest e-commerce market ahead of the U.S. since 2014, according to KraneShares data.
For long-term investors considering KWEB, the statistics support that thesis as well. A Goldman Sachs report "pegged Chinese e-commerce sales at $750 billion in 2016 sales, coming from 460 million online shoppers, and projects a CAGR of 23 percent through 2020 – nearly triple the rate of offline sales," according to Multi Channel Merchant.
Those trends should bode well for stocks such as Alibaba Group Holding Ltd. (BABA) and JD.com, Inc. (JD). These Chinese internet giants represent KWEB's second and third largest holdings, respectively, combining for 18 percent of the ETF's weight.
Other long-term catalysts for KWEB and Chinese e-commerce stocks include "uptake of online shopping among consumers in low-tier cities, e-commerce penetration beyond first-mover product categories such as apparel, purchases initiated from social media platforms, and the use of cross-border shopping to supplement domestic channels," according to McKinsey. Link: https://www.mckinsey.com/industries/retail/our-insights/how-savvy-social-shoppers-are-transforming-chinese-e-commerce.
If you compare FANG stocks to the BATJ (BIDU, Alibaba, Tencent and JD) stocks for the past 12 months ended 11/30/2017, the BATJ companies’ average revenue growth was 42.6, which is greater than the FANG companies’ average revenue growth of 32.6.
The PEG ratio is 1.29 for BATJ and 4.50 for FANG. The FANG stocks have outperformed on price but *underperformed on fundamentals*.
Given the PEG ratios, a rational investor might expect, with all else being equal, BATJ may outperform FANG over the next few years.
Net Assets is $1.725 billion.
KWEB Provides:
• Access to Chinese internet companies that provide similar services as Google, Facebook, Twitter, eBay, Amazon, etc.
• Exposure to companies benefitting from increasing domestic consumption by China's growing middle class.
• Exposure to Chinese internet companies listed in both the United States and Hong Kong
China Internet Sector Highlights:
• Chinese E-Commerce sales reached $749 billion in 2016 (compared to $394.9 billion in the U.S.) an increase of 26.2% year over year.
• China's internet population reached 721 million people, a penetration of only 52.2%. The U.S. internet population reached 287 million people, a penetration rate of 88.5%.
• Total Chinese retail sales reached $4.8 trillion in 2016, an increase of 4.4%. Online shopping accounted for 15.5% of retail purchases in China in 2016.
Data from National Bureau of Statistics in China. Link: https://kraneshares.com/kweb/
China has been a rewarding place to be among emerging markets, but a truly rewarding slice of the China economic pie has been internet stocks.
There are fundamental factors supporting KWEB's ascent. As is widely known, China is the world's largest internet market, with more internet users than the U.S. has citizens, and China has been the largest e-commerce market ahead of the U.S. since 2014, according to KraneShares data.
For long-term investors considering KWEB, the statistics support that thesis as well. A Goldman Sachs report "pegged Chinese e-commerce sales at $750 billion in 2016 sales, coming from 460 million online shoppers, and projects a CAGR of 23 percent through 2020 – nearly triple the rate of offline sales," according to Multi Channel Merchant.
Those trends should bode well for stocks such as Alibaba Group Holding Ltd. (BABA) and JD.com, Inc. (JD). These Chinese internet giants represent KWEB's second and third largest holdings, respectively, combining for 18 percent of the ETF's weight.
Other long-term catalysts for KWEB and Chinese e-commerce stocks include "uptake of online shopping among consumers in low-tier cities, e-commerce penetration beyond first-mover product categories such as apparel, purchases initiated from social media platforms, and the use of cross-border shopping to supplement domestic channels," according to McKinsey. Link: https://www.mckinsey.com/industries/retail/our-insights/how-savvy-social-shoppers-are-transforming-chinese-e-commerce.
If you compare FANG stocks to the BATJ (BIDU, Alibaba, Tencent and JD) stocks for the past 12 months ended 11/30/2017, the BATJ companies’ average revenue growth was 42.6, which is greater than the FANG companies’ average revenue growth of 32.6.
The PEG ratio is 1.29 for BATJ and 4.50 for FANG. The FANG stocks have outperformed on price but *underperformed on fundamentals*.
Given the PEG ratios, a rational investor might expect, with all else being equal, BATJ may outperform FANG over the next few years.
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