Posted March 16, 2015 1:10 am by Comments

KraneShares, the China focused ETF manager which manages the KraneShares CSI China Internet ETF (NASDAQ: KWEB), has just issued a China internet report which concluded that recent developments will allow China internet stocks to deliver attractive total returns compared to US internet stocks and broader emerging markets stocks in 2015. These China internet developments include:

  • At the National People’s Congress (NPC) which began on Thursday March 5th, Premier Li Keqiang Li broadly laid out China’s “Internet Plus” strategy, which includes promoting cloud computing, online banking, mobile internet, along with logistics for e-commerce expansion. He also stressed the need for more state investment in the Chinese internet sector.
  • MSCI is adding China internet stocks to MSCI ACWI and MSCI Emerging Markets. KraneShares has made calculations showing that over $10 billion would be added into Chinese internet stocks based on index funds and ETFs benchmarked to MSCI ACWI, EM and Asia indices.
  • On February 3, 2015, the China Internet Network Information Center (CNNIC) reported that the internet population within China increased by 31 million users to 649 million last year- representing 48% of the country’s total population. In comparison, the United States had 279 million internet users by the end of 2014 representing 87% of its total population.

The report goes on to note three China internet trends to watch this year and beyond:

  • Mobile banking: Jan 5, 2015 – Tencent Holdings Ltd (OTCMKTS: TCTZF; OTCMKTS: TCEHY) launches WeBank – China’s first online-only bank.
  • Connected car: Jan 29, 2015 – Baidu announces a strategic partnership with US based Harman International Industries (NYSE: HAR), a developer of auto entertainment & audio systems, to develop CarLife producing connected car experiences for drivers in China.
  • International expansion: Mar 4, 2015 – Aliyun, Alibaba Group’s cloud computing subsidiary, announces it is opening a data center in Silicon Valley.

The report ends by summarizing the recent results of the following key China internet stocks which are also in the KraneShares CSI China Internet ETF:

  • JD.Com Inc (NASDAQ: JD)
  • Autohome Inc (NYSE: ATHM)
  • Alibaba Group Holding (NYSE: BABA)
  • Baidu Inc (NASDAQ: BIDU)
  • Vipshop Holdings Ltd (NYSE: VIPS)
  • NetEase, Inc (NASDAQ: NTES)

To read the report summary or to download it, China Internet Flash Report: 2015 & beyond + an overview of 2014 results, go to the website of KraneShares. In addition, check out our China closed-end fund list and our China ETF list pages.

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