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If China Stocks Are Back in Style, CWEB Can Surge

BY | ETF Database
8:39 am ET 08/05/26 | 2 VIEWS
The recent initial public offering (IPO) of semiconductor manufacturer CXMT enriched insiders and early investors at that China tech company. It could also serve to renew interest in other China growth stocks.If that proves to be the case, the Direxion Daily CSI China Internet Index Bull 2x Shares (CWEB A) will be an ETF to watch for tactical short-term traders. CWEB attempts to deliver 200% of the daily returns of the CSI Overseas China Internet Index — a widely followed gauge of China internet stocks. It remains to be seen if the CXMT IPO is enough to renew global investors’ interest in China stocks. Broader gauges of stocks there are slumping this year, while U.S. and diverse international equity indexes and funds are rallying. For risk-tolerant traders willing to lay bets on CWEB, those wagers could pay off. After all, the ETF’s index is home to what some experts believe are top China stocks to own.Familiar Names Could Boost CWEBA pair of familiar names could be contributors to a resurgence by China stocks — one that could create short-term trading opportunities with the geared CWEB. In Morningstar’s recent ranking of the top China stocks, both Alibaba (BABA) and Tencent (TCEHY) made the cut. In the case of Alibaba, that consumer internet giant is actively buying back its own shares. That signals to investors that it sees value. “We expect Alibaba to return more capital to shareholders and increase its return on invested capital after divestments of noncore investments. We are pleased that Alibaba has upsized its share-repurchase program by USD 25.0 billion until March-end 2027 to USD 35.3 billion,” observed Morningstar analyst Chelsey Tam. The research firm says Alibaba is 52% undervalued. Tencent is also considered deeply undervalued. It could be a contributor to occasional upside for CWEB. That’s particularly so if the company executes on its artificial intelligence (AI) and semiconductor initiatives. “AI represents a meaningful new growth lever for Tencent. Despite AI chip export restrictions, Tencent’s differentiated approach—allocating GPUs to internal use rather than selling compute like other hyperscalers—allows it to convert AI directly into product and efficiency gains,” noted Morningstar’s Ivan Su. “Because Tencent owns the use cases, it can deploy models where they drive immediate impact. Early results are visible on the advertising side, and the strategy offers greater long‑term visibility.” Tencent and Alibaba combine for about 18% of the index tracked by the leveraged CWEB. For more news, information, and analysis, visit the Leveraged & Inverse Content Hub.

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