Chinese Stocks Up But Still Out

It has been quite the week for Chinese stocks as stimulus and optimism over the easing of COVID restrictions has investors and traders buying up stocks leveraged to China. The Kraneshares China Internet ETF (KWEB) was up over 11% heading into today which was the best week for the ETF…in two weeks! If the gains for KWEB heading into today hold up through the end of the session, the four best weeks in KWEB’s history dating back to 2013 will have all occurred this year!

In addition to having two separate weekly gains of over 10% in November, KWEB is also on pace for its third straight weekly gain of 5% or more. In the ETF’s nearly 10-year history, there has never been another streak of three weeks where the ETF has rallied 5% or more. It’s also interesting to note that three of the ETF’s five streaks of two or more weeks in a row have all come since the ETF peaked in February 2021.

An old maxim of markets is that big upside moves usually happen in bear markets, and the action in KWEB this year is a textbook example. Despite the ETF having its four best weeks on record this year, and two separate streaks where the ETF was up 5% or more in at least two consecutive weeks, KWEB is still down over 25% YTD and is more than 70% from its high less than two years ago. 

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