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Zacks Investment Ideas feature highlights: KraneShare CSI China ETF and Baidu

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For Immediate Release

Chicago, IL – June 15, 2022 – Today, Zacks Investment Ideas feature highlights KraneShare CSI China ETF (KWEB - Free Report) and Baidu (BIDU - Free Report) .

Chinese Equities Showing Signs of Relative Strength

Domestic equities were the place to be for much of the last decade and beyond. A historic bull market followed the Great Recession, with many individual companies experiencing stellar returns. Domestic companies really flourished and handily outperformed their Asian counterparts. In fact, as we can see below, large-cap U.S. stocks dominated Chinese large-caps since the financial crisis when stocks bottomed in March of 2009.

While it's still too early to call a true top in this ratio, we are beginning to see signs of Chinese equities turning the page on the last 13 years of underperformance. Many Chinese companies (and their stocks) were hit hard due to extensive COVID-19 related measures, along with regulatory and technology crackdowns in recent years. As China continues to lift lockdown restrictions and eases up on some of the more assertive regulations, the Chinese equities that have been hated by investors will soon become loved.

Chinese technology stocks are really starting to show signs of relative strength. As we can see below, the KraneShare CSI China ETF bottomed in March relative to domestic technology stocks, and is now up on the year relatively speaking.

The KraneShare CSI China ETF tracks the CSI Overseas China Internet Index, which consists of companies whose primary business is focused on internet-related technology. KWEB is showing some bullish divergences and has made a higher high. KWEB contains many tech companies that investors are likely familiar with.

One such company isBaidu, a Chinese-language internet search provider based in Beijing. The company offers a host of services such as Baidu App which allows users to access feed services on mobile devices; Baidu Search to access its search capabilities; and Baidu Feed which provides users with a personalized timeline based on their demographics and interests. BIDU also offers various cloud services and solutions, in addition to online marketing services that include pay for performance, auction-based services that allow customers to bid for priority placement of paid sponsored links.

BIDU, a Zacks Rank #1 (Strong Buy) stock, has built an impressive track record in terms of earnings surprises, having exceeded estimates in every quarter for the past five years running. The company most recently delivered first quarter EPS results back in May of $1.77/share, a 132.89% surprise over the $0.76 consensus estimate. BIDU has posted a 52.86% average earnings surprise over the past four quarters.

BIDU is trading undervalued at a 15.96 P/E relative to its industry group (19.73). Make sure to add BIDU to your watchlist if you haven't already done so, as the stock looks ripe for a period of outperformance.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.


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Baidu, Inc. (BIDU) - free report >>

KraneShares CSI China Internet ETF (KWEB) - free report >>