The reason for the fast growth was revealed by Richard Sneller, head of emerging-market equities at Baillie Gifford. He told the Financial Times, “The speed with which young consumers are adapting to technological change, in areas such as e-commerce and online shopping, is much faster than in the United States.” And let’s not forget how much larger China’s population is than the U.S.
My personal favorites among the Chinese tech stocks are Tencent, Alibaba and Ctrip.com. Alibaba and Ctrip.com are the respective leaders in China for e-commerce and online travel bookings.
Some of you may be unfamiliar with Tencent since it trades over the counter. The company is China’s largest and most used Internet service portal. But it is so much more. It is also an advertising, media and entertainment business. Its instant messaging service QQ has more than 850 million active users. Its WeChat messaging app has over 650 million active users. It is also battling U.S. tech giants for the latest advancements in chatbots.
An interesting side note is that emerging-market Internet and media group Naspers (OTC: NPSNY) owns about 34% of Tencent. Naspers is headquartered in South Africa.
An easy way for investors to capture the broad array of China’s Internet-related companies is through an exchange-traded fund. The KraneShares CSI China Internet ETF (NASDAQ: KWEB) includes the BANTs and all the rest of China’s tech stars. The largest positions in this fund are Tencent, Alibaba, Baidu, Ctrip.com and JD.com.
Even when (not if) Chinese stocks swoon again, I plan to continue building a position in KWEB.
This article is brought to you courtesy of Tony Daltorio from Wyatt Investment Research.