eyeQ: could friendly combination help this China play?
Experts at eyeQ have used AI and their own smart machine to analyse macro conditions and generate actionable trading signals. A price drop makes this one to watch.
16th December 2025 10:43
by Huw Roberts from eyeQ
“Our signals are crafted through macro-valuation, trend analysis, and meticulous back-testing. This combination ensures a comprehensive evaluation of an asset's value, market conditions, and historical performance.” eyeQ
- Discover: eyeQ analysis explained | eyeQ: our smart machine in action | Glossary
KraneShares CSI China Internet ETF (KWEB)
Macro Relevance: 21%
Model Value: 40.49
Fair Value Gap: -11.67% discount to model value
Data correct as at 16 December 2025. Please click glossary for explanation of terms. Long-term strategic model.
KraneShares CSI China Internet ETF USD (LSE:KWEB) - the popular exchange-traded fund (ETF) that provides exposure to the Chinese internet sector - has now fallen 15% from its October high.
The bad news keeps coming on multiple fronts at home and overseas. Yesterday, Chinese retail sales posted their worst growth outside the Covid lockdown years. That’s the latest in a run of poor economic data suggesting consumers remain reluctant to spend.
And, more broadly, tech stocks continue to suffer. Broadcom Inc (NASDAQ:AVGO) has now joined Oracle Corp (NYSE:ORCL) as the poster child of fears about a possible artificial intelligence (AI) bubble. The Nasdaq index breaking below its 50-day Moving Average could prompt further technical selling.
It seems a long way since January when DeepSeek’s R1 AI model stunned the world with strong performance, open architecture and all for a price considerably cheaper than OpenAI’s ChatGPT. The talk back then was of a Sputnik moment - the start of an AI arms race between US and Chinese technology.
For many investors, holding some KWEB was a way to have some exposure to Chinese tech in case they emerged either as the winner or, at least, a low-cost option that wasn’t that far behind the US despite tariffs and chip restrictions.
In principle, that thinking hasn’t changed. So, should investors be thinking about buying the dip?
On eyeQ, KWEB now sits 11.7% cheap to macro conditions. That would be sufficient to fire a bullish signal except for the fact that a macro relevance score sits at just 21%. Our rule is that any stock has to be in a macro regime (defined as a macro relevance score of 65% or more) to generate a signal.
Even with low model confidence, eyeQ model value (orange) provides a steady anchor — and historically, spot has tended to snap back towards it after overshoots.
The drivers are also interesting. KWEB wants reflation, tight credit spreads and is comfortable with the idea of less rate cuts/possible rate hikes from the world’s central banks.
One scenario for 2026 is sticky inflation which, in turn, suggests a few more reductions from the Federal Reserve before they join their central bank peers and end the rate-cutting cycle.
If credit spreads remain well behaved at the time, we have a friendly combination for KWEB.
One to watch.
Source: eyeQ. Past performance is not a guide to future performance.
Useful terminology:
Model value
Where our smart machine calculates that any stock market index, single stock or exchange-traded fund (ETF) should be priced (the fair value) given the overall macroeconomic environment.
Model (macro) relevance
How confident we are in the model value. The higher the number the better! Above 65% means the macro environment is critical, so any valuation signals carry strong weight. Below 65%, we deem that something other than macro is driving the price.
Fair Value Gap (FVG)
The difference between our model value (fair value) and where the price currently is. A positive Fair Value Gap means the security is above the model value, which we refer to as “rich”. A negative FVG means that it's cheap. The bigger the FVG, the bigger the dislocation and therefore a better entry level for trades.
Long Term model
This model looks at share prices over the last 12 months, captures the company’s relationship with growth, inflation, currency shifts, central bank policy etc and calculates our key results - model value, model relevance, Fair Value Gap.
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