Entering text into the input field will update the search result below

Contrarian Play: Buying China Internet ETF KWEB In Times Of Coronavirus Panic


  • The idea of buying KraneShares CSI China Internet ETF in the current market environment can seem crazy to many investors.
  • However, the most profitable ideas usually seem crazy in the short term.
  • KraneShares CSI China Internet ETF is home to many high-growth companies with enormous potential in the years ahead.
  • The timing looks good, as the COVID-19 situation in China is improving, and the momentum indicators look bullish.
  • In the short term, it's hard to know how KraneShares CSI China Internet ETF will perform, but over the next few years, chances are that the current price will look like a huge opportunity in retrospect.
  • I do much more than just articles at The Data Driven Investor: Members get access to model portfolios, regular updates, a chat room, and more. Get started today »

China is the epicenter of the global COVID-19 crisis, and this will have some material implications on the Chinese economy. However, the stock market is a forward-looking mechanism, and investment decisions should be made by looking at the windshield as opposed to the rearview mirror.

KraneShares CSI China Internet ETF (NYSEARCA:KWEB) is home to a collection of high-quality companies with exceptional potential for growth in the long term. Besides, the timing is starting to look increasingly attractive for a position in China Internet stocks.

The Fundamentals

Investing in China carries all kinds of risks and uncertainties related to the political and regulatory landscape, as well as the macroeconomic and cyclicality factors that cannot be disregarded, especially in current times.

However, portfolio risk is not only what you buy, but how much you buy can be even more important. Besides, international diversification is a major consideration to keep in mind when managing risk at the whole portfolio level. For investors with lots of exposure to U.S. stocks, adding some international presence can be a good idea in order to avoid putting all your eggs in one basket.

Many of the most promising investment opportunities can be found in China nowadays, and especially in the Chinese Internet sector, where many businesses are benefiting from enormous opportunities in areas such as online commerce, digital entertainment, social media, digital payments, and all kinds of Artificial Intelligence applications.

In the words of Charlie Munger himself:

"The strongest companies in the world are not in America. I think Chinese companies are stronger than ours and are growing faster."

Internet penetration in China is currently only 60% of the population, but the size of the Chinese population is so big that there are almost 3 times the number of internet users in China as in the United States.

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

ChartData by YCharts

The ETF Timing Algorithm is updated monthly in The Data Driven Investor. A subscription to The Data Driven Investor provides you with solid strategies to analyze the market environment, control portfolio risk, and select the best stocks and ETFs based on quantitative factors. Our portfolios have outperformed the market by a considerable margin over time, and they are built on the basis of solid quantitative research and statistical evidence. Click here to get your free trial now, you have nothing to lose and a lot to win!

Performance as of December 31, 2019

This article was written by

Andres Cardenal, CFA profile picture
Proven strategies for superior returns and active risk management
Andrés Cardenal, CFA. Economist, financial analyst, columnist. Naturally flavored.

Analyst’s Disclosure: I am/we are long BABA. KWEB. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I replicate the Data Driven Portfolio with my personal money.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.