Domestic and international stock ETFs mostly traded lower Tuesday, as the major U.S. stock indexes pulled back from all-time highs. Investors digested retail earnings, lower crude prices and news that China was further opening its mainland markets to foreign investors.
KraneShares CSI China Internet (KWEB) slipped in the stock market today. A top-10 stock holding, Vipshop (VIPS), reported before the open. The online retailer strongly beat earnings views, but it trimmed gains of as much as 9% in morning trade to 0.4% at the close. It grew total active customers 62% to 23 million.
"Taking a cue from JD.com (JD) and Alibaba (BABA), investors bid up Vipshop coming into earnings. The company delivered on the high expectations with an outstanding quarter and strong third-quarter guidance," Brendan Ahern, chief investment officer of KraneShares, told IBD in an email.
Three other top-10 holdings in the China internet ETF report Wednesday -- Tencent (TCEHY), NetEase (NTES) and Ctrip (CTRP). Tencent is China's leader in online games and messaging services. It owns the popular WeChat messaging app. NetEase is a game developer and provider of email and e-commerce solutions.
KWEB invests in China-based companies whose primary business or businesses are in the internet and internet-related sectors. It offers exposure to domestic consumption powered by China's growing middle class.
According to KraneShares, China's e-commerce sales reached $590 billion in 2015 vs. $342 billion in the U.S.
The firm's China internet ETF has racked up a 6.1% gain in the past five trading sessions and a 10.7% gain this month through Aug. 16 -- outpacing every other foreign exchange traded fund that IBD tracks and screens for trading volume.
This momentum marks a sharp comeback -- KWEB trails most international peers with a year-to-date gain of 1.1%.
IBD'S TAKE: Compare and contrast non-leveraged international funds at ETF Center.
IShares China Large-Cap (FXI), an asset leader in its segment, also traded lower Tuesday as the broad stock market eased from record highs.
Like its internet-focused peer, this China ETF has gained momentum in recent weeks after trailing many international single-country ETFs with an 8.3% gain so far in 2016. The uptrend came in part from expectations for China's nod for the keenly awaited Shenzhen-Hong Kong Connect trading link.
This approval came to pass Tuesday. It will give all foreign investors access to mainland China's second-largest market for the first time, although the exact timing of its launch has not yet been announced.
12 Bellwether ETFs
Here's how major exchange traded funds across major asset classes performed today, with IBD Relative Price Strength Ratings.
The RS Rating is a measure of a stock's price performance over the last 12 months, compared with all stocks and ETFs, on a scale of 1 to a best-possible 99.
Following daily ETF market action can be key to successful investing:
SPDR S&P 500 (SPY), -0.5%, RS 53
PowerShares QQQ (QQQ), -0.6%, RS 61
SPDR Dow Jones Industrial Average (DIA), -0.4%, RS 53
IShares Core S&P Mid-Cap (IJH), -1.0%, RS 64
IShares Russell 2000 (IWM), -0.8%, RS 67
IShares MSCI EAFE (EFA), -0.1%, RS 32
Vanguard FTSE Emerging Markets (VWO), -0.5%, RS 75
SPDR Gold Shares (GLD), +0.5%, RS 67
United States Oil (USO), +1.5%, RS 16
IShares Core U.S. Aggregate Bond (AGG), -0.1%, RS 32
PowerShares DB U.S.$ Bullish (UUP), -0.9%, RS 24
IPath S&P 500 VIX Short-Term Futures (VXX), +3.4%, RS 1
