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Alibaba's Q2 Earnings Beat Puts These ETFs in Focus

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Chinese e-commerce giant Alibaba Group (BABA - Free Report) reported mixed second-quarter fiscal 2020 results before the opening bell on Nov 1 wherein it beat earnings but lagged revenue expectations.

Earnings of $1.83 per ADS beat the Zacks Consensus Estimate by 28 cents and were up 36% year over year. Revenues climbed 40% year over year to $16.65 billion but fell shy of the estimated $16.72 billion. The robust results were driven by growth in its core e-commerce and cloud computing businesses. Core e-commerce revenues grew 40% year over year, cloud computing revenues soared 64%, and digital media and entertainment revenues increased 23% (see: all the Technology ETFs here).

Annual active consumers increased 19 million from the last quarter to reach 693 million in September. Mobile monthly active users in its China retail marketplaces increased 30 million quarter over quarter to 785 million.

Alibaba currently has a Zacks Rank #3 (Hold) and a VGM Score of D. It belongs to a top-ranked Zacks industry (top 33%).

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:

Invesco BLDRS Emerging Markets 50 ADR Index Fund ADRE
The product offers exposure to 50 emerging market-based depositary receipts by tracking the BNY Mellon Emerging Markets 50 ADR Index. About 42.3% of the portfolio is allotted to Chinese firms with Alibaba occupying the top position at 20.3%. Taiwan, Brazil and India 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 $179.8 million in its asset base while trading in light volume of about 5,000 shares. It charges 18 bps in fees per year and has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook.

Invesco BLDRS Asia 50 ADR Index Fund ADRA

This ETF follows the capitalization-weighted BNY Mellon Asia 50 ADR Index and tracks the performance of approximately 50 Asian market-based DRs. Alibaba occupies the top position with 15.7% allocation. Japanese firms make up for the largest share at 33.1% while Chinese firms account for 32.3% of the assets. ADRA is often overlooked by investors as evident from its AUM of $17.7 million and average daily volume of about 1,000 shares. It charges 30 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook.

iShares MSCI China ETF MCHI

This ETF targets the Chinese stock market and follows the MSCI China Index. Holding 461 securities in its basket, Alibaba takes the top spot with 14% share. From a sector look, about 25% of the portfolio is allotted to consumer discretionary while financials (22.2%) and communication (21.7%) round off the next two spots. The fund has amassed $3.9 billion in its asset base while charging 59 bps in annual fees. Volume is also solid as it exchanges nearly 4 million shares on average daily basis. The ETF has a Zacks ETF Rank #3 with a Medium risk outlook.

Franklin FTSE China ETF FLCH

This product follows the FTSE China Capped Index, charging investors 19 bps in annual points. It holds 765 stocks in its basket with Alibaba taking the top spot at 13.92%. Consumer discretionary, financials and communication services are the top three sectors with more than 21% allocation each. The ETF has amassed $36.8 million in its asset base and sees average daily volume of 9,000 shares. It has a Zacks ETF Rank #3 (read: ETFs in Focus as China's GDP Nears 30-Year Low Level).

ProShares Online Retail ETF ONLN

This ETF lets investors’ tap into the potential growth of online retail by pinpointing retailers that principally sell online or through other non-store channels, and then zeroing in on the companies reshaping the retail space. It follows the ProShares Online Retail Index, holding 24 stocks in its basket. While American firms dominate the portfolio with three-fourth share, Chinese firms account for 20.6% with Alibaba taking the second spot and accounting for about 12% share. The product has amassed $22.1 million in its asset base while trading in a paltry volume of around 10,000 shares a day on average. It charges 58 bps in annual fees from investors.

WisdomTree China ex-State-Owned Enterprises Fund CXSE

This fund offers exposure to targeted 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 149 securities in its basket, Alibaba is the top firm accounting for 11.7% share. Consumer discretionary and communication services take the top two spots at 34.2% and 20%, respectively, from a sector look, followed by financials (11%) and healthcare (8.5%). The product has been able to manage $127.5 million in its asset base and trades in volume of 14,000 shares a day on average. It has a Zacks ETF Rank #3 with a Medium risk outlook (read: China's Factory Activity Data Disappoints Again: ETFs in Focus).

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