Chart Of The Week: Investors Not Giving Up On ‘KWEB’

Year-to-date inflows for ‘KWEB’ total $3.8 billion despite a 43% decline in prices for the ETF.

sumit
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Senior ETF Analyst
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Reviewed by: Sumit Roy
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Edited by: Sumit Roy

ETF investors haven’t given up on Chinese internet stocks yet. Despite a crushing decline in prices for the KraneShares CSI China Internet ETF (KWEB), investors are still adding money to the fund.

According to Bloomberg, on Friday, investors put $55 million into the ETF, erasing a large chunk of the $78 million of outflows the fund had seen over the four prior sessions.

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Zooming out, inflows into KWEB have totaled more than $3.8 billion year-to-date—and $2.2 billion since July, the month China’s government unleashed a rapid-fire series of regulatory crackdowns on various internet firms.

KWEB currently has $4.8 billion in assets under management. Prices for the ETF are down 43% year-to-date, and 58% from their all-time highs set in February.

On the surface, the hefty inflows into KWEB suggest ETF investors believe the drawdown in China’s internet stocks may have gone too far, and they are positioning themselves for a rebound in the sector. But inflows have been elevated throughout the past several weeks, and that hasn’t stopped the ETF from tumbling further.

There is also the possibility investors may be using KWEB for more complicated strategies that involve pair trades; for instance, going short a specific Chinese internet stock and buying the ETF as a hedge.

In any case, this is an ETF to keep a close eye on, as China’s crackdown on internet firms shows no signs of abating.

Email Sumit Roy at [email protected] or follow him on Twitter sumitroy2

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.