Alibaba, NBA Partnership Could Boost 'EMQQ' ETF

A partnership between Chinese firm Alibaba and the National Basketball Association (NBA) could provide a boost for the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ), which features Alibaba as one of its prime holdings with a 7 percent weighting.

The agreement, entered into in March, would provide for distribution of NBA content and merchandise across the Chinese company’s platforms–media outlets as well as ecommerce sites.

“NBA game highlights, original programming, and classic NBA games will be offered to Alibaba users,” writes ETC Marketing Services. “The original programming will cover a wide range of popular basketball and cultural topics, including game predictions, fashion, sneakers, and memorabilia. The content will be available throughout the regular season, NBA All-Star, the NBA Playoffs, and The Finals, bringing the latest NBA trends and news through various interactive formats, such as short videos and live streaming by celebrities and influencers, according to the press release.”

It was a natural partnership given the explosive growth of sports in China the past decade. Professional basketball, in particular, has been on the rise as evidenced by Toby Xu, Vice President of Alibaba Group who said: “the NBA is one of the most popular sports leagues in the world, with a sizable and passionate fan base in China. With this expanded partnership, we will fully leverage Alibaba’s ecosystem to create a unique digital experience and bring the NBA closer to fans and consumers in China.”

“Between 2012 and 2016, the sports industry grew from 950 billion yuan to over 1.9 trillion yuan and is expected to grow to nearly 3.6 trillion yuan by 2022, according to Statista,” ETC Marketing Services added. “A report by CNBC attributed the growth of interest in sports in China to the growth of digital platforms that allows the Chinese population to choose when and how to view sports.”

The U.S.-China trade impasse heavily discounted a lot of U.S. equities the past week, but it also put the red tag sale on emerging markets (EM). Combine the tariff battles with a cautious U.S. Federal Reserve, and it puts the EM space at an attractive valuation relative to its peers.

While most investors might have been driven away by the losses in EM during much of 2018, savvy investors who were quick to see the opportunity viewed EM as a substantial markdown. From a fundamental standpoint, low price-to-earnings ratios in emerging markets ETFs have made them prime value plays as capital inflows continue in 2019.

EMQQ marries the idea of technology and EM in one ETF. The fund invests in companies with exposure to the ecommerce and Internet sectors in emerging markets.

Purchasing EMQQ provides exposure to companies that are positioned to benefit as emerging economies mature, the consumer class expands, and their populations increases their utilization of the Internet and ECommerce.

“By 2025, annual consumption in emerging markets will reach $30 trillion, and this is considered to be the biggest growth opportunity in the history of capitalism, according to the McKinsey Global Institute,” an ETC Marketing Services newsletter wrote.

For more market trends, visit the Innovative ETFs Channel.