Chinese Investment Bank Takes Majority Stake In KraneShares

July 11, 2017 8:26 am
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KraneShares, the exchange-traded-funds provider known for its unique lineup of China-focused funds, including the popular KraneShares CSI China Internet ETF (NASDAQ:KWEB), sold a majority stake in itself to China Investment Capital Corporation, a Chinese investment bank.

CICC trades on the Hong Kong Stock Exchange. The company was founded in 1995 as a partnership between China Construction Bank, one of that country's largest banks, and Wall Street titan Morgan Stanley (NYSE:MS).

Financial terms of CICC's deal for a majority stake in KraneShares were not disclosed in a statement issued by the companies.

KWEB The Bellwether

Home to $531.4 million in assets under management, the aforementioned KWEB is the largest ETF in the KraneShares suite. KWEB, which turns four years old later this month, has become the bellwether China Internet ETF. The ETF has risen to acclaim thanks to its large stakes in well-known Chinese Internet companies, including Tencent Holdings Ltd (OTC:TCEHY), Alibaba Group Holding Ltd (NYSE:BABA) and Baidu Inc (ADR) (NASDAQ:BIDU).

China is the world's largest Internet market with more Internet users than the U.S. has citizens, but internet and e-commerce penetration in the world's second-largest economy is still low compared to Western countries, indicating KWEB could see a positive growth trajectory going forward.

“KraneShares is proud to join forces with CICC,” said Jonathan Krane, CEO of KraneShares, in the statement. “CICC and KraneShares are both singularly focused on China. We share the same mission of building a trusted bridge of financial knowledge and expertise between the United States and China. We believe the combined company will be the premier source for China investment products and research globally.”

Other Products

The KraneShares Bosera MSCI China A ETF (NYSE:KBA) is one of KraneShares' other well-known products. That ETF, the first A-shares ETF in the U.S. to track an index from MSCI, has $206.4 million in assets under management after recently swelling in size as investors anticipated MSCI elevating A-shares to its international indexes.

The firm also offers the KraneShares Zacks New China ETF(NYSE:KFYP), an ETF focusing on the “New China” economy, and the KraneShares E Fund China Commercial Paper ETF (NYSE:KCNY). KCNY holds short-term, investment-grade Chinese commercial paper.

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