Tapping Asia’s Internet Demand

By Ron DeLegge

August 26, 2013 at 08:00 PM

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The bear market in Chinese stocks has scared away some, but others smell opportunity.

A new ETF targeting fast-growing Chinese Internet companies, called the KraneShares CSI China Internet ETF (KWEB), was listed on the NASDAQ Stock Exchange.

"KraneShares CSI China Internet ETF provides U.S. investors with an opportunity to gain exposure to China's growing internet sector with the cost efficiencies of ETF investing," said Brendan Ahern, Managing Director of KraneShares. "We see two powerful demographic trends driving China's internet sector: since 2000, internet spending by urban Chinese has increased 14% annually, and China's rural population continues to migrate to urban areas, further fueling internet usage."

A McKinsey & Company report showed China E-Tailing accounted for $190 billion in sales in 2012 and could reach as much as $650 billion by 2020.

"There are approximately 600 million internet users in Mainland China. Chinese internet company market capitalizations now rival the largest U.S. and global industry leaders; along with the potential for Chinese internet IPOs to come later this year, this is definitely a sector that warrants attention," said Zhigang Ma, General Manager of China Securities Index Co.

The FunD's benchmark is the CSI Overseas China Internet Index and contains between 20 to 30 stocks. All of the companies included are involved in Internet software and services. Krane Funds Advisors is based in New York City and serves as the investment advisor. KWEB charges annual expenses of 0.63%.

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