This year, many of KWEB’s holdings have been on an AI innovation streak, strongly influencing how AI touches their customers’ lives. Large language models (LLMs) are being offered at an extremely low cost by the likes of Alibaba, Baidu, and Tencent, for the consumers’ benefit, which is driving demand for cloud computing. Meanwhile, platform-specific AI tools, such as Kuaishou’s Kling AI, are making technical fields like video animation user-friendly, generating new opportunities for self-expression and media production. Also, non-human agents in video games and elsewhere could begin to appear eerily like humans in their interactions with customers, with the potential to upgrade customer service and digital experiences significantly. Finally, Alibaba, Baidu, and other companies are merging our experiences and identities in the online and physical worlds with the help of AI.

Outside of DeepSeek’s open-source LLM and Manus’ novel AI agents’ concept, we believe incumbent internet companies could lead most of the development of China’s AI ecosystem. As such, we believe the KraneShares CSI China Internet ETF (Ticker: KWEB) is highly representative of the space.

China Internet Recent Highlights:

• China’s top internet companies had a mostly positive fourth quarter as eight out of KWEB’s top ten holdings beat estimates on earnings per share (EPS).
• KWEB outperformed US equities in the first quarter of 2025, returning +18.42% compared to the S&P 500 Index’s decline of -4.28%.¹
• China internet equities experienced a downdraft following US President Trump’s “Liberation Day” tariff announcements, even though less than 2% of KWEB companies’ revenue is generated in the United States.²

China Internet Earnings Report Contents:

• China Internet Sector Recent Highlights
• Subsector Analysis
• Theme Highlight – Spotlight On AI Trends In China Internet
• KWEB Top 10 Holdings Earnings Update

Sources: Company Reports, The Benchmark Company

Citations:

1. Data from Bloomberg as of 4/1/2025.
2. Data from FactSet, Bloomberg, and KraneShares as of 3/31/2025. China Internet refers to KWEB holdings. Estimated revenue breakdowns are used for companies that do not report their revenues by region.

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.