(Bloomberg) — After several crushing months, dip-buyers are finally starting to abandon Chinese tech stocks.

The $4.9 billion KraneShares CSI China Internet Fund (ticker KWEB) has posted two straight days of outflows, putting the exchange-traded fund on track to break its five-week streak of inflows, according to data compiled by Bloomberg. That’s as losses approach 60% from its mid-February high, with China’s wide-ranging regulatory crackdown battering fund mainstays from Tencent Holdings Ltd. to Alibaba Group Holding Ltd.

KWEB emerged as a popular fund to park bottom-calling bets, attracting record single-day inflows in July amid the worst of the Chinese tech rout. However, with uncertainty over Beijing’s next move continuing to bruise the nation’s equities, it appears that dip buyers are starting to lose their mettle, according to Bloomberg Intelligence’s Eric Balchunas. Combined with once-bullish money managers such as Ark Investment Management’s Cathie Wood offloading exposure to the country, ETF investors appear to be following suit.

“Some investors have likely reached their breaking point. I think many thought the turnaround would have happened by now and it didn’t,” Balchunas said. “It’s impressive they hung in there as long as the did, to be honest. But China is not the U.S.”

Dip-buying has been handsomely rewarded this year in U.S. equity markets, with the S&P 500 not seeing a 5% drawdown in almost 200 trading days. By contrast, the Nasdaq Golden Dragon China Index of U.S. listed Chinese firms has dropped 10 of the last 11 weeks.

As a result KWEB — which invests primarily in American depositary receipts and Hong Kong-listed shares of Chinese companies — has plunged roughly 41% in 2021, with losses accelerating in July amid increasing government scrutiny of overseas listings. Meanwhile, the $184 billion Invesco QQQ Trust Series 1 ETF (ticker QQQ) — which tracks U.S. tech stocks — has gained more than 16% this year.

Story continues

More stories like this are available on bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2021 Bloomberg L.P.

(305) 707 0888