China’s Singles Day, a shopping extravaganza that dwarfs Amazon’s Prime Day, is scheduled for Nov. 11 and that could present investors with imminent opportunity in a slew of ETFs with large allocations to Alibaba (NYSE: BABA) and other ETFs heavy on Chinese consumer stocks.
That group includes the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ).
EMQQ tracks an index of leading Internet and eCommerce companies serving Emerging Markets. It seeks to offer investors exposure to the growth of online consumption in the developing world. EMQQ holdings operate in diverse markets such as India, China, Brazil, Turkey, Nigeria, and Indonesia, to name a few. To be included, the companies must derive their profits from Ecommerce or Internet activities and include search engines, online retail, social networking, online video, e-payments, online gaming, and online travel.
Year-to-date, EMQQ is higher by nearly 27%, beating the MSCI Emerging Markets Index by a margin of better than 2-to-1. Statistics confirm Singles Day is a potentially epic event for EMQQ.
“The biggest shopping day in the world – Single’s Day or the 11/11 celebration in China – is fast approaching. Chinese eCommerce company platform Alibaba (BABA) is a prime beneficiary of increased revenue generated on 11/11,” according to EMQQ’s issuer.
Credible Singles Day Play
Alibaba is EMQQ’s largest holding at a weight of almost 8%. Additionally, the fund devotes almost 60% of its weight to Chinese stocks, including five among its top 10 holdings. Alibaba is looking to expand its retail potency beyond China and that could be another catalyst for EMQQ.
“Additionally, Alibaba is leveraging its non-China franchises such as Lazada and AliExpress to generate more 11/11 sales outside of China. According to a Forbes article, Alibaba has over 130 million customers outside of China,” notes EMQQ’s issuer.
To be included within the ETF’s underlying index, companies must derive the majority of their profits from E-commerce or Internet activities and further includes search engines, online retail, social networking, online video, e-payments, online gaming, and online travel.
EMQQ primarily focuses on the internet and e-commerce sectors of the developing world, helping investors capitalize on the growth of consumption in emerging markets, which represents a significant growth opportunity as more than a billion people are expected to enter the consumer class in the coming decades.
“Chinese eCommerce firms are gearing up for what will likely be a strong Singles Day event. Chinese eCommerce firms, such as Alibaba and JD.com, will likely benefit from the sales event given their dominant position in China,” according to EMQQ’s issuer.
For more market trends, visit ETF Trends.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.