To The Moon

🌟🌟🌟DeepSeek has ignited a seismic shift with Chinese technology companies at the forefront of this AI revolution.  DeepSeek which  was a relatively unknown company just a few months ago, has emerged as a formidable challenger to established AI giants, marking what many are calling China's ChatGPT moment. 

Is KWEB $KraneShares CSI China Internet ETF(KWEB)$  a Good Buy Now with a DeepSeek driven rerating?

KWEB tracks the CSI Overseas China Internet Index, which consists of China based companies whose primary businesses are focused on Internet and Internet related Technology.  KWEB includes publicly traded securities in either Hong Kong Stock Exchange, Nasdaq or New York Stock Exchange.

The Top 10 holdings include Alibaba Group, Tencent Holdings, PDD Holdings, Meituan, Trip.com, Netease, Baidu, Full Truck Alliance -ADR, Kuaishou Technology and Kanzhun-ADR.

The Top 10 weightage is 58.9%.  Total number of holdings is 30.  The expense ratio is 0.70%.  Dividends are paid annually.  The current dividend yield is 3.06%.

Performance wise KWEB is up 3.8% on Friday and 6.7% in the past 5 days.  Since January KWEB has risen by 24% and was up 41% in 2024.  That is a pretty good performance considering the volatility of the Chinese tech stocks.

As a result of DeepSeek's breakthrough, Chinese Internet Giants are now doubling down on their AI investments, recognising the potential for AI to transform their business and maintain global competitiveness. 

Alibaba, Tencent, Kuaishou, Baidu and ByteDance are among the companies investing heavily in AI research and development.  With a vast user base, these Chinese Internet Giants are well positioned to develop AI solutions tailored to local needs while also competing on the global stage.

Alibaba's latest and most advanced Large Language Model (LLM) is Qwen 2.5 Max which was released in January 2025.  This model utilises  MoE architecture like DeepSeek and has been trained on over 20 trillion tokens.

Qwen 2.5 Max has demonstrated impressive performance across multiple benchmarks, outperforming models like DeepSeek V3, GPT-40 and Llama-3.1-405B in various tests.  Qwen 2.5 Max excels in language understanding, coding, mathematics and reasoning.  It also features multimodal capabilities, allowing it to process text and visual inputs. 

Alibaba's share price has jumped 20% in the past 5 days and is now up 52% year todate.

Tencent's flagship LLM is Hunyuan-Large, an open source model with 389 billion total parameters and 52 billion activated parameters.  Hunyuan-Large was released in late 2024 and utilises an advanced MoE architecture to achieve performance equivalent to a dense model with 7 times the activation parameters.  The model has demonstrated strong capabilities in both Chinese and English language processing, outperforming Meta's Llama 3.1 405B across many key benchmarks. 

$TENCENT(00700)$  share price is up 7.4% on Friday and has risen 10.5% in the past 5 days.  It is now up by 14% year todate. 

These are just the Top 2 holdings of KWEB and it is not surprising that KWEB's share price has jumped on the upward momentum in tandem with its top holdings.

Chinese Internet companies have become the transmission engines of China's economy.  This means that they are likely to benefit from Chinese authorities stimulus policies first, especially from policies around consumption. 

Free cash flow yield, buybacks and dividends have increased from these Chinese Internet companies.  It is likely that this will continue in 2025, making China's Internet companies more attractive than their US counterparts.  These companies are undervalued compared to their US counterparts, trading at almost one half of the earnings multiple. 

KWEB represents the best and strongest of Chinese Internet companies in just 1 trade.  Despite the tariff levy on Chinese stocks by the US Donald Trump's administration,  the US now represents only 14% of China's total exports.  This is a drop from 21% in previous years.   As such the potential impact on China's economy overall is likely to be limited.   China 's trade with Asia has increased significantly as China based companies have been de risking away from the US. 

I believe that KWEB is still a great buy as it is likely that the Chinese' s markets may continue their upward trend that began in 2024 with Chinese Internet companies continuing their stellar performance. 

I have invested in KWEB 6 months ago and I am happy with its performance.  KWEB does the heavy lifting for me to select the best Chinese Internet companies at a low cost.  Maximum power at minimum cost!  That is my favourite way of investing. 

@Daily_Discussion  @TigerStars  @Tiger_comments  @TigerClub  @CaptainTiger  @MillionaireTiger