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ETF News And Commentary

“Singles’ Day” has kicked off with splurge in spending by Chinese e-shoppers. This is especially true, as more than 80% of China’s consumers polled this year have planned to shop on Singles’ Day, as per a survey by YouGov.

Clothing and accessories, cosmetics and personal care, household products, home electrical appliances as well as food and beverages are the most popular categories enjoying higher sales in this online shopping festival. As such, e-commerce players have a tradition of enjoying a huge rally on the Singles’ Day shopping fervor.

While several Chinese e-commerce platforms as well as bricks and mortar retailers participate in the event, Alibaba (BABA - Free Report) continues to dominate sales. The Chinese e-commerce giant, which turned this day into the biggest 24-hour spending blitz worldwide seven years ago, has made a stunning start. It raked in about $12 billion in sales in the first 12 hours of the day.

With slowing growth in China and lower consumer spending, market is closely watching whether Alibaba will be able to generate a 60% jump in sales from last year’s record $14.3 billion. According to research firm Fung Global Retail & Technology, Alibaba’s online sales are expected to reach $20 billion this year (read: Is The Dip a Good Entry for Alibaba ETFs Post Solid Q2?).

The company has more than 600 international brands on its Tmall.com website with products from Apple and Target for the first time this year. Brands from U.S. retailers such as Costco, Macy's, Starbucks and Gap will also be available at Alibaba's online store for the first time. Further, Alibaba will experiment with live streaming and virtual reality shopping.

Other e-commerce firms like JD.com (JD - Free Report) , Baidu (BIDU - Free Report) and Tencent Holdings (TCEHY - Free Report) also offer huge discounts on clothing, smartphones, travel packages and other goods and expect a high sales volume on the day. In particular, JD.com teamed up with Walmart (WMT - Free Report) to boost Singles’ Day sales.

How to Play

Given this, investors seeking to tap Singles’ Day benefits in a diversified way should focus on –the following four ETFs that provide substantial exposure to the Chinese e-commerce segment.

KraneShares CSI China Internet Fund (KWEB - Free Report)

This product provides concentrated exposure to the Chinese Internet market by tracking the CSI China Overseas Internet Index. In total, the fund holds 35 securities in its basket with Alibaba, Tencent, JD.com and Baidu taking the top four positions with a combined 39.4% share. The ETF has amassed $244.8 million in its asset base and charges 72 bps in annual fees from investors. It has a Zacks ETF Rank of 5 or ‘Strong Sell’ rating with a High risk outlook.

Emerging Markets Internet & Ecommerce ETF (EMQQ - Free Report)

This ETF targets the Internet and ecommerce sectors of the developing world by tracking the Emerging Markets Internet & Ecommerce Index. Holding 47 securities in the basket, Alibaba, Tencent, Baidu and JD.com are among the top 10 firms that collectively make up for 29.5% share. The product has accumulated $38.5 million in its asset base and charges 86 bps in annual fees. It has a Zacks ETF Rank of 4 or ‘Sell’ rating with a Medium risk outlook (read: 3 Top Performing Emerging Market ETFs of Q3).

Guggenheim China Technology ETF (CQQQ - Free Report)

This fund targets the overall technology sector in China and follows the AlphaShares China Technology Index, holding 73 stocks in its basket. Tencent, Alibaba and Baidu are among the top four firms accounting for a combined 27.7% of the assets. In terms of industrial exposure, about half of the portfolio is allotted to Internet software and service while electronic components and semiconductors hold the next two spots. The product manages an asset base of $60.1 million while charges 70 bps in fees per year. It has a Zacks ETF Rank of 4 with a High risk outlook.

Global X NASDAQ China Technology ETF (QQQC - Free Report)

This ETF also targets the broad technology sector and tracks the NASDAQ OMX China Technology Index. It is unpopular with AUM of just $13.9 million and charges 65 bps in annual fees. It holds 40 stocks in its basket with Tencent, Baidu and Alibaba accounting for nearly 20% of assets. About 45% of the portfolio is allotted to Internet mobile applications while semiconductors and communication equipment round off the top three. QQQC has a Zacks ETF Rank of 3 or ‘Hold’ rating with a High risk outlook (read: China ETF Winners One Year Post-Selloff).

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