There were no changes to the KraneShares models this week. We highlight recent improvement from KWEB in light of the easing tariff tensions between the US and China.
There were no changes to the KraneShares models this week.
Bulls returned to equity markets in force on Monday after positive developments in trade negotiations between the US and China. US Treasury Secretary Scott Bessent announced Sunday evening eastern time that the US and China had reached an agreement to suspend reciprocal tariffs for 90 days following productive talks between the two nations in Geneva (source: cnbc.com). This brings tariffs down to a 10% baseline from each country, with an additional 20% tariff imposed from the US on Chinese goods relating to fentanyl, bringing the total US tariffs on China to 30%. Still, this is substantially less than the 125% level that had been reached due to escalating tensions after the beginning of April.
Chinese equities also saw strong rallies across the board after the 90-day pause was announced. The broad MCHI climbed over 3% intraday and is now testing its negative trendline that was initiated in April. More focused areas like the KraneShares CSI China Internet ETF KWEB saw sharper intraday moves of more than 5%. This fund has experienced some interesting movement over the past several months. It reached a multi-year higher at $39 back in October after the Chinese government announced large-scale stimulus measures. We then saw the fund experience increased volatility over the next few months, but it stayed well north of the pre-stimulus range in the mid-$20s. The beginning of 2025 saw consistent improvement with AI-related tailwinds that failed to push to the October 2024 level, only to have the fund turn back around when tariffs were announced. Again, the decline marked a higher low for the fourth consecutive time since early 2024, and we now see KWEB pushing back toward a test of its trendline in the mid-$30s. The current technical picture is mixed as KWEB carries a 3.48 fund score (prior to Monday’s move), but the recent improvement should be taken as a firm positive. Notable overhead resistance can be seen from $35.50 to $38.50, with additional resistance expected at the October 2024 highs of $39. Initial support can be seen on the default chart at $30 and $28.
