China Internet: Opportunity after KWEB’s ~30% drop from its Oct peak
Sector valuation, as measured by 86Research’s proxy basket, now stands at a distressed 15.4x. Over the past 3 years, there has been 5 KWEB drawdowns >20% and each peak-to-trough episode lasting 3-6 months, suggesting the current correction could be nearing its end. Several catalysts may also help stabilise sentiment including Trump’s visit to China, the upcoming Two Sessions (additional stimulus) and improving economics from China’s AI leaders. In this issue of 86TradeIdeas, the team highlights several quality names that could command significantly higher multiples in a normalised market, including Trip.com, Atour and DiDi, alongside Beike, which could benefit from further housing policy support. Kuaishou and Baidu offer differentiated exposure to key AI verticals. Despite near-term geopolitical uncertainty, they see compelling re-rating potential across these names in the coming months.
Edition: 231
- 06 March, 2026
China: Muted recovery, selective alpha
86Research expects 2026 to be a year of gradual recovery for China’s internet and new economy sector. While policy support should begin to emerge in 1H26, its impact on activity and earnings is likely to be felt mainly in 2H26. They model sector earnings growth of 10%, solid but well short of a cyclical boom. Valuations remain undemanding, leaving room for further re-rating as fundamentals improve. Against this backdrop, 86Research favours selective exposure to three structural tailwinds: easier global liquidity, scaling GenAI monetisation and accelerating overseas expansion. Their 2026 top picks - Alibaba, PDD, Baidu, Trip.com and DiDi Global - each offer differentiated exposure across growth, value and AI optionality.
Edition: 227
- 09 January, 2026
The narrowing divide between China and India’s weight in the MSCI Indices
The spread between India and China weights in active Asia Ex-Japan funds has narrowed to the lowest levels in Copley’s 13-year history and now stands at 16.17% vs. a peak of 45.3% in Aug 20. China’s decline over this period has been dominated by Consumer Discretionary, Communication Services and Financials. 3 companies standout as key drivers of the move lower: Alibaba, Tencent and Ping An Insurance. Increases in fund weight have been minimal with PDD, BYD and Trip.com seeing moderate upticks. India’s rise has been driven by the Financials sector. Specifically, 3 banks: ICICI Bank, HDFC Bank and Axis Bank.
Edition: 180
- 23 February, 2024
Consumer Discretionary
Blue Lotus reinitiates coverage of the stock with a Sell rating as they expect domestic travel growth to slow down in 2024 and assumptions on Chinese outbound travel demand need to be reassessed. They see rising competition in the domestic travel market from Meituan and Tongcheng Travel in the short haul segment as well as share gains made by economy hotels encroaching TCOM’s commission base. While TCOM was quick in launching Large Language Model (LLM) for travel planning, Blue Lotus believes it lacks sufficient data and the advent of AIGC will simplify travel booking which works to TCOM’s disfavour.
Edition: 176
- 22 December, 2023
Samsung Electronics (005930 KS)
Technology
Return of the king - after a brief flirt with underweight in late 2022, active Asia Ex-Japan managers have rotated back into Samsung, pushing allocations towards record highs. It captured the largest increase in average holding weight and the largest increase in net overweight over the last 6 months. It also saw the joint 4th largest increase in the percentage of funds with outright ownership (was eclipsed by Meituan, Trip.com and BYD). Samsung has cemented itself as one of the highest conviction holdings in the Asia Ex-Japan region right now.
Edition: 164
- 07 July, 2023