China’s E-Commerce and local services giants – JD.com, Alibaba, and Meituan – are engaged in a high-stakes battle to dominate the market for instant commerce. This competition reflects broader shifts in consumer behavior, technological innovations, and strategic pivots to capture growth in a saturated digital economy. Over the past two years, these companies have invested significantly in customer subsidies, logistics infrastructure, and ecosystem integration to secure their positions in a market that is projected to exceed $500 billion by 2030.¹

We believe the pivot to instant delivery demonstrates the enduring growth potential of China’s internet sector, despite high E-Commerce penetration, and the companies within the KraneShares CSI China Internet ETF (Ticker: KWEB).

China Internet Recent Highlights:

• China internet companies had a mostly positive first quarter, though Alibaba’s earnings missed estimates as revenue and profitability growth slowed amid intense investment into AI initiatives and as the company returned significant capital to shareholders via dividends and share repurchases.
• The 90-day truce in US-China trade relations has benefited China internet equities from a sentiment perspective, though the fundamental impact is limited as KWEB’s holdings derive less than 2% of their revenues from the US.
• KWEB continues to deliver strong returns this year, delivering a total return of 16.49% year-to-date (YTD), as of May 20, 2025, compared to only 2.37% for the Nasdaq 100 Index.²

The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed or sold, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. For performance data current to the latest month-end, top ten holdings, and other fund information, please visit kraneshares.com/kweb.

China Internet Sector Earnings Report Highlights:

• China Internet Sector Recent Highlights
• Subsector Analysis
• Theme Highlight – Fast & Furious: The Race For Instant Commerce
• KWEB Top 10 Holdings Earnings Update

For KWEB top 10 holdings, risks, and other Fund information, please click here.

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Sources: Company Reports, The Benchmark Company

Citations:

1. Data from Statista as of 12/31/2024.
2. Data from Bloomberg as of 5/31/2025.

Definition:

Nasdaq 100 Index: The Nasdaq-100 is a stock market index made up of equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock exchange. It is a modified capitalization-weighted index. The index was launched on January 31, 1985.