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Brendan Ahern discusses KWEB on CNBC’s Fast Money

Monday January 13th:
KraneShares Managing Director Brendan Ahern appeared on CNBC’s Fast Money to discuss the KraneShares China Internet ETF (KWEB). A transcript from the interview is provided here:

Melissa Lee: How does this differ from some of the other Chinese ETFs out there?

Brendan Ahern: It’s the only pure play on the China internet and eCommerce sector. It also holds securities in both the New York Stock Exchange, NASDAQ as well as the Hong Kong Stock Exchange. For instance, Baidu, because it’s listed on the NASDAQ, is not included in any of the broad-based emerging market indices. We have a unique structure of capturing Chinese internet companies no matter where they list.

Melissa Lee: Who determines the weighting of each holding within this ETF?

Brendan Ahern: China Security Index Company (CSI) of Shanghai is the largest index in mainland China. They run it for us. We thought that was very important. We wanted a Chinese perspective to make this product investable.

Josh Brown: One of the reasons why this whole space gets me so excited are the numbers we’re talking about. Can you can speak to some of the trends in China and how they differ from the U.S? and how much room there might be looking forward?

Brendan Ahern: It’s an incredible phenomenon, Josh. there’s three trends taking place in China: Urbanization hundreds of millions of people are moving into the cities. As they do, they have access to better earning jobs, they begin to spend more money. Discretionary spending is up 300% in the last eight years. When retail sales take place, they increasingly take place online. In China, 4.4% of all retail sales take place online the equivalent here in the U.S is only 1.1%.

Tim Seymour: As people have been just raining down negative on China, how do you use this? I agree with everything that we’ve been saying on the desk here about where the growth is. But the Chinese internet companies have been attacked for their accounting standards. and people ran from Baidu last year, even though I think that is a huge opportunity. What do you say about that?

Brendan Ahern: We want to be a provider of education for investors. We want to provide information on what’s taking place in China from the Chinese. You should hear their perspective on what’s taking place. First and foremost, this China eCommerce phenomenon has been written about by some of the most prominent organizations and publications in the U.S. McKinsey and Company, Bain and Company, A.T. Kearney, Harvard Business Review and CNBC Fast Money Contributor Josh Brown have all written about this incredible phenomenon about the adoption of the internet and the growth of eCommerce in China today. McKinsey wrote, China’s eCommerce sector has grown 120% each of the last ten years. You have an amazing adoption of the internet within China today.

There is no guarantee that the securities mentioned are in or will be added to the fund or the fund’s benchmark. Holdings are subject to change. Current and future holdings are subject to risk. The Fund’s current holdings can be seen here