Chinese equities broadly performed well over the past week, following Jerome Powell’s dovish press conference.

Many sectors, especially semiconductors, rallied to the upside, after China expressed its concerns over Nvidia’s H20 chips being a possible “security risk.” This distaste for US chips has given local competitors in a China a perceived advantage, causing renewed optimism for the sector (source: chinalastnight.com). Additionally, DeepSeek announced the launch of its latest V3.1 model, stating that it includes faster response times with better reasoning. DeepSeek also says that their models will be compatible with locally developed chips, further providing an edge to local competitors (source: cnbc.com).

Another sector that performed very well was the real estate sector. The Shanghai government released the “Six Rules for the Real Estate Market,” which has been focused on the reduction of restrictions when it comes to purchasing new homes. Some of the changes include getting rid of the limit on the number of units purchased, first-time home buyers being exempt from property tax, no distinction between first and second home in interest rates etc (source: chinalastnight.com). These tailwinds may continue to push Chinese equities higher.

This week we highlight the KraneShares Hang Seng TECH Index ETF (KTEC). KTEC reversed into a positive trend last month and completed a bullish catapult at $17.50 on Monday, marking its third consecutive buy signal. KTEC maintains a fund score of 4.92, moving up from a fund score of 4.56 at the start of August. Since its April low of $13, KTEC has experienced a series of higher lows. Initial support is at $16, with additional strong support at $15.50. Resistance can be seen at $18.50, its multi-year high.

The table below is a review of important technical data on a select group of KraneShares ETFs. Significant changes within the past week are highlighted in Green if positive or Red if negative. This portfolio is designed to be used as a "radar" screen to bring your attention to potentially important technical changes that may require your attention and potential action. When evaluating the Fund Score, the strongest issues have scores of 4 or higher while those ETFs with scores below a 3 are no longer considered solid citizens.

The distribution curve places each ETF on a bell curve according to their respective degrees of overbought or oversold status using a 10-week distribution. ETFs that are statistically oversold will appear on the left-hand side of the bell curve, while those that have become statistically overbought will appear on the right-hand side of the bell curve. Perhaps the most useful attribute of this feature is that it displays the entire universe on the curve at one time to give us a general picture of whether the KraneShares ETF universe is generally overbought on a near-term basis, or generally oversold. Our best opportunities are to buy strong relative strength ETFs that have regressed back toward mean conditions based on market weakness, or have become oversold based upon extreme market weakness. Weekly Distribution is a short-term gauge that is most helpful in timing entry and exit points, while the longer-term information of trend and relative strength is a more controlling factor in the decision of whether to buy or sell.

Legend:

• UPPERCASE indicates that the RS chart is on a buy signal.
• lowercase indicates that the RS chart is in a sell signal.
• GREEN lettering indicates the ETFs trend chart is on a buy signal.
• RED lettering indicates the ETF is on a sell signal.
• Box Color indicates the Sector Status Rating. Green = Favored, Yellow = Average, and Red = Unfavored.

The KraneShares Dynamic China Rotation Model is designed to identify major themes in the Chinese marketplace through the use of the Point & Figure relative strength tools. For more information on the portfolio construction and back testing, see the model info file on the models page.  (Note: The KraneShares ETF Models will be updated Tuesday mornings by 9:30 am EST) 

Weekly Changes: 

* - Dates prior to 10/15/2019, which is when the KraneShares Dynamic China Rotation Model became available on the NDW Research Platform, are representative of when the position was added to the backtested model.