CICC and Krane launch China internet ETF

Apr 9th, 2018 | By | Category: ETF and Index News

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China International Capital Corporation (CICC) and Krane Funds Advisors have launched their first joint ETF, which offers investors exposure to Chinese internet companies.

CICC KraneShares CSI China Internet Index ETF is now listed on SEHK.

The CICC KraneShares CSI China Internet Index ETF is now listed on SEHK.

The CICC KraneShares CSI China Internet Index ETF is listed on Stock Exchange of Hong Kong (SEHK) and trades in three separate currencies: US dollars (09186 HK), Hong Kong dollars (03186 HK) and renminbi (83186 HK).

Lin Ning, managing director of CICC’s Hong Kong asset management arm commented, “CICC is seeing considerable client interest and demand for a China-focused Internet ETF in the Asia market. We are excited to launch this innovative ETF on the SEHK”.

Jonathan Krane, CEO of KraneShares shared similar sentiments: “KraneShares is proud to partner with CICC and expand our reach into the Hong Kong market. We believe the CICC KraneShares CSI China Internet Index ETF presents a great opportunity for investors across Asia”.

The ETF replicates the strategy of the US-listed KraneShares CSI China Internet ETF (KWEB US), which has over $1.5 billion in assets under management and has returned nearly 45% over the last year.

As with the US-listed version, the new HK-listed ETF tracks the CSI Overseas China Internet Index, which comprises Chinese internet companies that benefit from increasing domestic consumption within China. At the top of this list are the colossal Chinese powerhouses Tencent and Alibaba, with roughly 10% and 9% weightings respectively.

The index universe includes overseas-listed (i.e. non-China listed) Mainland China-incorporated companies with at least three months trading history (unless IPO exceeds $3bn in which case the company is accelerated into the index) and at least 50% of their revenues generated in China.

According to CICC, China is one of the world leaders in terms of total internet users and e-commerce sales with 721 million internet users, comprising 21.1% of the global internet population in 2016. With an internet penetration rate of just 52.2%, there is still considerable room for growth in China’s internet sector.

Additionally, China is the world leader in total e-commerce sales. In 2017, online sales in China reached $1.14 trillion, or nearly 50% of the total $2.3trn e-commerce sales worldwide.

The HK-listed ETF follows the same fee structure as its older US-listed counterpart, with an expense ratio of 0.72%.

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