To The Moon

🌟🌟🌟China's Terrific 10 are performing well in recent times,  not the Magnificent 7.  Shall we focus on China's Terrific 10 and not the Magnificent 7?

For those who are new to investing, the Terrific 10 are Alibaba, Tencent, Meituan, Xiaomi, JD.com, NetEase, Baidu, BYD, Geely and SMIC.    

The Magnificent 7 represents 7 of US' strongest Tech Stocks - Apple, Microsoft, Nvidia Amazon, Alphabet, Meta Platforms and Tesla.

The Magnificent 7 performed well in 2024 but in 2025,   performance for these mega cap stocks has been mostly negative so far.

It all began with the emergence of cheaper AI technology developed by DeepSeek which may have  kick start a new wave of AI investment in China.  DeepSeek has shown the way that it is possible to achieve significant improvements in AI model efficiency without having to spend heavily to do so.  DeepSeek is also Open Sourced too, making it publicly available.  DeepSeek could very well be China's OpenAI moment.

$KraneShares CSI China Internet ETF(KWEB)$  which represents China's best Big Tech is up 21.7% year todate.  In contrast $The Magnificent Seven ETF(MAGS)$  is down 12.8% year todate.

Despite this extraordinary performance, the Terrific 10 still offer value for money compared to the high valuation of the Magnificent 7.

Take for example Alibaba.  Its P/E ratio is only 15 compared to Amazon's P/E ratio at 31.5.   BYD, Chinese biggest EV company is only trading at a P/E ratio of 26 while Tesla has a high P/E ratio of 128.  Another example is Baidu, China's search engine and AI leader. Its P/E ratio is only 10.1 compared to Google's P/E ratio of 19.7.  In other words, valuation for Terrific 10 as a group is still rather low compared to the Magnificent 7. 

I have invested in both KWEB ETF and MAGS ETFs and the results reflect the contrast between the Terrific 10 and Magnificent 7.

KWEB tracks a market cap weighted index composed of overseas listed Chinese Internet companies .  The Top 10 holdings include Alibaba, Tencent, PDD Holdings, Meituan, Trip.com, JD.com, NetEase and many more.  Total number of holdings is 30.  The Top 10 holdings takes up 61% weightage of the total holdings. 

KWEB pays dividends every 6 months. The current dividend yield is 2.94%.  The next dividend is due in June 2025.

Performance wise, KWEB is up 21.7% and in 2024, KWEB has risen by 29%.

MAGS ETF represents the Magnificent 7 in just 1 trade.  It has  a dividend yield of 0.96%.  Performance wise MAGS is down 12.8% year todate but in 2024, MAGS has risen by 21.3%. 

Wall Street Analysts are bullish on KWEB with a Buy rating, an average Target price of USD 42.29 according to Tipranks.  That is an upside potential of 21%.

Wall Street Analysts are still bullish on MAGS ETF with a Buy rating, an Average Target price of USD 61.11, according to Tipranks.  That is an upside potential of 29%.

With both ETFs KWEB and MAGS, I have the best of both worlds - the best Big Tech Stock in China and the US in just 2 trades.   That packs a lot of power and minimises the volatility in the markets. 

While the Terrific 10 shows lots of upside potential in capital appreciation, I believe it is just as important not to forget about the Magnificent 7 which are still Tech Giants with wide moats. 

Investing is about diversification and minimising risks.  It is also about patience and time in the market. 

As the late Charlie Munger likes to say "The Big Money is not in the Buying and Selling but in the Waiting". 

@Daily_Discussion  @TigerStars  @Tiger_comments  @TigerClub  @CaptainTiger  @Tiger_SG