Wall Street is about to launch the Chinese version of "Mag 7" - "Lucky 8"

In the past, there were the "Seven Sisters" in the technology stocks, and now there is the "Lucky 8" in Chinese concept stocks.

According to media reports, following the "Seven Sisters" ETF MAGS in the US stock market, the well-known investment company Roundhill Investments plans to launch a Chinese concept technology stock ETF called Lucky 8.

It is introduced that the Lucky 8 ETF is positioned as the Chinese version of the "Mag 7", with the trading code "LCKY". It is an equally weighted index fund, with initial component stocks including Tencent, Alibaba, Meituan, BYD, Xiaomi, Pinduoduo, JD.com, and Baidu.

Dave Mazza, CEO of Roundhill, explained the reason for choosing these 8 stocks is because they "occupy a leading position in market innovation", and stated:

"If the economy accelerates growth, this may be an opportunity for investors to enter the Chinese market."

Once the ETF obtains approval from the U.S. Securities and Exchange Commission (SEC), it will be officially launched this summer.

It is worth noting that in early March this year, Merrill Lynch released a research report stating that state-owned enterprises leading in banking and insurance (Yinhang), operators (Yunyingshang), telecommunications (Dianxin), and oil and coal (Shiyoumeitan) have been the four high-yield sectors in the Chinese stock market this year, which can also be seen as the Chinese version of the "Mag 7", known as "YYDS" (Forever God).

What Makes Lucky 8 Stand Out?

In recent months, the Hong Kong stock market has staged an "epic" rally, leading global markets, with internet companies playing a crucial role.

Market data shows that this year, most of the 5 Chinese concept internet/technology ETFs in the domestic market have achieved over 15% gains. Especially this month, several internet giants have successively disclosed their latest performance reports, contributing to about 10% gains for 4 of the ETFs.

However, currently, the tracking targets of the 5 Chinese concept internet/technology ETFs in the domestic market are the China Internet 30, Global China Internet, and other comprehensive indices, with up to 50 index component stocks. Compared to stock funds, there are discounts in terms of tracking flexibility and accuracy.

This is also one of the reasons why Dave Mazza plans to launch Lucky 8:

"If you only want to buy stocks of these companies, it can be difficult with some traditional Chinese concept stock ETFs, but Lucky 8 can do it." In the medium to long term, domestic and foreign investment institutions and foreign giants are optimistic about the profit prospects of internet giants.

CMB Securities pointed out in a recent report that in the past two weeks, driven by the positive impact of the overall stock market sentiment, the valuation of the Chinese internet industry has gradually stabilized and rebounded from the bottom.

Huachuang Securities stated that the Hang Seng Technology sector has embarked on a "high-quality development" in the past two years, still offering valuation cost-effectiveness. With the improvement of fundamentals, cash flow enhancement, and dividend payout increase, the valuation recovery trend is expected to continue.

Goldman Sachs expects that the consumer technology and service-related industries will stand out, leaning towards investing in large enterprises with high-quality qualifications and emphasizing their cash return capabilities.

Earlier reports indicated that legendary hedge fund manager Michael Burry and hedge fund legend David Tepper's two funds increased their bets on Chinese concept technology stocks such as JD.com, Alibaba, and Baidu in the first quarter.

The stock price performance and latest financial results of Lucky 8 so far this year are as follows:

• Meituan-W (03690.HK) has risen by 45.18% cumulatively, with Q4 revenue increasing by 22.6% to 73.7 billion yuan, adjusted net profit more than quadrupling, and annual revenue turning from loss to profit.
• Tencent Holdings (00700.HK) has risen by 30.61% cumulatively, with Q1 revenue increasing by 6% to 159.5 billion yuan, net profit surging by 54%, video usage time increasing by over 80%, and gross profit growth outperforming revenue for six consecutive quarters.
• Xiaomi Group-W (01810.HK) has risen by 16.3% cumulatively, with Q1 revenue increasing by 27% to 75.51 billion yuan, adjusted net profit increasing by over 100% year-on-year, and overall gross profit margin rising by 2.8 percentage points to 22.3%.
• JD.com has risen by 7.78% cumulatively, with Q1 net revenue increasing by 7% to 260.05 billion yuan, net profit increasing by 18.8% to 7.37 billion yuan, also exceeding expectations, and the logistics business revenue turning from loss to profit Pinduoduo (PDD) has accumulated a 7.7% increase, with Q1 revenue growing by 131% to 86.81 billion yuan, and net profit skyrocketing by 202% to 30.60 billion yuan, both far exceeding expectations.

Alibaba (BABA) saw a 6.6% year-on-year increase in Q4 revenue to 221.87 billion yuan, while adjusted net profit declined by 11%, with a significant 45% increase in overseas e-commerce revenue.

BYD Company Limited (01211.HK) has accumulated a 3.36% decrease, with Q1 revenue increasing by 3.97% to 124.944 billion yuan, and net profit increasing by 11% to 4.57 billion yuan.

Baidu (BIDU) has accumulated a 15.79% decrease, with Q1 revenue slightly increasing by 1% to 31.5 billion yuan, and net profit growing by 22%.