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ETFs in Focus on Alibaba's Strong Fiscal Q2 Earnings

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Chinese e-commerce giant Alibaba Group (BABA - Free Report) reported robust second-quarter fiscal 2021 results before the opening bell on Nov 5, wherein it beat earnings and revenue expectations.

Earnings of $2.65 per ADS beat the Zacks Consensus Estimate of $2.06 and increased from the year-ago earnings of $1.83. Revenues climbed 30% to $22.84 billion and topped the consensus mark of $22.9 billion. The strong performance was driven by robust growth in online shopping demand and China's easing of coronavirus lockdown restrictions.

The company’s cloud computing revenues grew 60% year over year driven by the acceleration in digitization across all industries and businesses of all sizes in China, while core e-commerce business rose 29%. The digital media and entertainment sector saw revenue growth of 8%. Notably, the average daily subscriber base of the streaming video business Youku increased 45% year over year (read: What Does a Biden Win Mean for China ETFs?).

Annual active consumers increased 15 million from the last quarter to 757. Mobile monthly active users in its China retail marketplaces increased 7 million quarter over quarter to 881 million.

Alibaba currently has a Zacks Rank #2 (Buy) and belongs to a top-ranked Zacks industry (placed at top 41% of the total 250+ industries in the Zacks universe).

ETFs in Focus

ETFs having the highest allocation to the Chinese e-commerce giant will be in focus in the days ahead. Below, we have highlighted six ETFs in detail (see: all the Technology ETFs here):

Invesco BLDRS Emerging Markets 50 ADR Index Fund (ADRE - Free Report)
 
The product offers exposure to 50 emerging market-based depositary receipts by tracking the S&P/BNY Mellon Emerging Markets 50 ADR Index. About 49.1% of the portfolio is allotted to Chinese firms, with Alibaba occupying the second position at 19.8%. Taiwan, India and Brazil round off the next three spots in terms of country exposure. Consumer discretionary, information technology, financials and communication services are the top four sectors. ADRE has amassed $143.5 million in its asset base while trading in light volume of about 8,000 shares. It charges 30 bps in fees per year and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.

iShares MSCI China ETF (MCHI - Free Report)

This ETF targets the Chinese stock market and follows the MSCI China Index. Holding 608 securities in its basket, Alibaba takes the top spot with 19.2% share. From a sector look, about 37.7% of the portfolio is allotted to consumer discretionary while communication (21.2%) and financials (13.2%) round off the next two spots. The fund has amassed $6.3 billion in its asset base while charging 59 bps in annual fees. Volume is also solid as it exchanges nearly 3.5 million shares daily on average. The ETF has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: China ETFs to Shine Bright on Solid Economic Data).

Franklin FTSE China ETF (FLCH - Free Report)

This product follows the FTSE China Capped Index, charging investors 19 bps in annual fees. It holds 837 stocks in its basket with Alibaba taking the top spot at 17.9%. Consumer discretionary, communication services and financials are the top three sectors. The ETF has amassed $67.9 million in its asset base and sees an average daily volume of 11,000 shares. It has a Zacks ETF Rank #4 (Sell).

SPDR S&P China ETF (GXC - Free Report)

This product follows the S&P China BMI Index, charging investors 59 bps in annual points. It holds 768 stocks in its basket with Alibaba taking the top spot at 16.1%. From a sector look, consumer discretionary takes the largest share at 34.7%, while communication services and financials round off the next two spots. The ETF has amassed $1.6 billion in its asset base and sees an average daily volume of 81,000 shares. It has a Zacks ETF Rank #4 with a Medium risk outlook.

ProShares Online Retail ETF (ONLN - Free Report)

This ETF focuses on global retailers that derive significant revenues from online sales. It follows the ProShares Online Retail Index, holding 26 stocks in its basket. While U.S. firms dominate the portfolio with three-fourth share, Chinese firms account for 21% with Alibaba taking the second spot and accounting for about 12.9% share. The product has amassed $665.5 million in its asset base while trading in a good volume of around 239,000 shares a day on average. It charges 58 bps in annual fees from investors (read: Online Retail ETF Hits New 52-Week High).

WisdomTree China ex-State-Owned Enterprises Fund (CXSE - Free Report)

This fund offers exposure to Chinese stocks that are not state-owned enterprises. It tracks the WisdomTree China ex-State-Owned Enterprises Index, charging 32 bps in annual fees. Holding 150 securities in its basket, Alibaba is the second firm accounting for 10.1% share. Consumer discretionary and communication services take the top two spots at 40% and 20.5%, respectively, from a sector look. The product has been able to manage $456.8 million in its asset base and trades in volume of 94,000 shares a day on average. It has a Zacks ETF Rank #4 with a Medium risk outlook.

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