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4 Solid ETF Deals for China Singles Day

Sweta Killa

'Singles Day’ in China has gained immense popularity in recent years, with e-commerce players making quick bucks on the back of heavy discounts and promotions to lure solitary souls. Also known as anti-Valentine's Day, the date 11.11 depicts those who are single (read: Time for China ETFs?).


The young Chinese binge on this popular occasion making it the world’s busiest online shopping day. In fact, Singles Day is now much bigger than Cyber Monday and Black Friday with 80% more online sales in 2014. This year too, Singles Day is set to be bigger than ever, surpassing stellar sales records of last year, as per KPMG.


Clothing and accessories, cosmetics and personal care, household products, home electrical appliances as well as food and beverages are the most popular categories that generally enjoy higher sales in this online shopping festival.


Singles Day: A Revenue Booster


Chinese e-commerce giant Alibaba Group (BABA) turned into the biggest 24-hour cyber spending blitz worldwide six years ago. Alibaba hit a record $9.3 billion in sales last year versus $5.8 billion in 2013 and $3.1 billion in 2012. One analyst, SunTrust, expects Alibaba sales to reach $12 billion this year (read: Alibaba ETFs Set to Surge on Blockbuster Q2 Results).


This year, the company has 50% more participating vendors from around the world and 30,000 brands offering more than six million products through its various online shopping platforms, including Tmall, Taobao Marketplace, group-buying site Juhuasan and the AliExpress global retail site.


JD.com (JD) is bolstering its sales and promotion on the day to give stiff competition to Alibaba. It is expecting sales to double from the last year. Other e-commerce firms like Baidu (BIDU), Jumei International (JMEI) and Vipshop Holdings (VIPS) will also offer huge discounts and expect a high sales volume on the day.


Courier services are also expected to rise with the surge in e-commerce business. So logistics giants such as SF Express, STO, and YTO should also be on the list of gainers.


How to Play


E-commerce players have a tradition of enjoying a huge rally on the Singles Day shopping fervor. Investors seeking to tap “Single Day” benefits in a diversified way should focus on the following four ETFs that provide substantial exposure to the Chinese e-commerce or retail segment.


KraneShares CSI China Internet Fund (KWEB)


This product provides concentrated exposure to the Chinese Internet market by tracking the CSI China Overseas Internet Index. In total, the fund holds 58 securities in its basket with heavy concentration on the top four firms – Tencet Holdings (TCEHY), Ctrip.com, Alibaba and BIDU – which combine to make for 37.4% share. The ETF has amassed $169.9 million in AUM and charges 71 bps in annual fees from investors. Volume is good as it exchanges 156,000 shares in hand per day. The fund surged 16% in the trailing one-month period (read: Top and Flop ETFs of October).

 

Guggenheim China Technology ETF (CQQQ)


This fund targets the overall technology sector in China and follows the AlphaShares China Technology Index, holding 76 stocks in its basket. Alibaba dominates the fund’s return with 21.7% share while other firms hold no more than 9.5% of assets. In terms of industrial exposure, about 65% of the portfolio is allotted to Internet mobile applications while electronic components and semiconductors round off to the next two spots. The product manages an asset base of $56.7 million while trades in a small volume of around 40,000 shares a day. Expense ratio came in at 0.71%. CQQQ added 8.5% over the past one month.


Global X NASDAQ China Technology ETF (QQQC)


This ETF also targets the broad technology sector and tracks the NASDAQ OMX China Technology Index. It is unpopular and illiquid with AUM of just &15.9 million and average daily volume of around 9,000 shares. It charges 65 bps in annual fees and holds 38 stocks in its basket with none holding more than 9.05% of assets. About half of the portfolio is allotted to Internet mobile applications while communication equipment makes up for 12% share. QQQC was up 8.2% over the past one month.


Global X China Consumer ETF (CHIQ)


This product offers exposure to the consumer sector in China by tracking the Solactive China Consumer Index. Holding 41 securities in its basket, it is pretty spread out across each component as none of these holds more than 5.68% share. The ETF is also well diversified across industries with automobile manufacturing, Internet retail, packaged food products, and apparel & luxury goods occupying double-digit exposure each. The fund has a lower level of $95.7 million in AUM and about 53,000 shares in average daily volume. It charges 65 bps in annual fees and expenses and added 4.6% over the past one month (read: China Ends One Child Policy: Stocks & ETFs to Watch).


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KRANS-C CHN INT (KWEB): ETF Research Reports
 
GUGG-CHINA TEC (CQQQ): ETF Research Reports
 
GLBL-X NDQ CHIN (QQQC): ETF Research Reports
 
GLBL-X CHIN CON (CHIQ): ETF Research Reports
 
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