Chinese equities, and international equities as whole, as discussed here, improved broadly over the course of the past week.  The improvement in Chinese equities was driven mainly by a cooling of trade talks between the United States and China, as the US Treasury Secretary, Commerce Secretary, and US Trade Representative all met with Vice Premier He Lifeng to discuss China’s export controls on rare earth elements and US export controls on semiconductors. On the economic front, CPI in China fell slightly month-over-month by -0.2%, driven mainly by a -1.7% drop in energy prices, which accounted for 70% of the CPI decline (source: chinalastnight).

Although Chinese equities improved over the past week, other international equities improved by a higher margin. This ultimately led the KraneShares Tactical Emerging Markets Model (KRANETACTEM.TR) to sell the KraneShares Bosera MSCI China A 50 Connect Index ETF (KBA) and purchase the KraneShares MSCI Emerging Markets Ex China Index (KEMX).

In the Asset Class Group Score Page (ACGS), China moved from the 59th group to the 47th, showcasing the ongoing technical improvement of Chinese securities. One name that stands out is the KraneShares CSI China Internet ETF (KWEB). After reversing into a column of Xs last week, KWEB now stands one box away from breaking a double top at $35 and moving back into a positive trend. Year-to-date, the fund has a performance of almost 20%. Additionally, the fund has a yield of over 3%. Initial support can be seen at $32.50, with additional support at $30.

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.