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Singles' Day Set to Break Record This Year: 5 ETF Deals

Sweta Killa

Singles’ Day is here and e-shoppers in China are binging on what is touted as the world’s busiest online shopping day. Sales during this day or Double 11, are traditionally higher than U.S. Black Friday and Cyber Monday combined.

E-commerce players have a tradition of enjoying a huge rally on the Singles’ Day shopping fervor. Last year, total sales hit more than $30.8 billion on Singles Day, more than doubling combined sales of $14.1 billion in the United States on Black Friday and Cyber Monday. This year is unlikely to be an exception, with many market researchers predicting another record level of online purchases despite a slowing economy caused by the U.S.-China trade spat.

A recent survey by management consulting firm Oliver Wyman showed that over 50% of consumers plan to spend more during this year’s Singles’ Day festival than last year (read: China ETFs Surge: Will the Upside Continue?).

While several Chinese e-commerce platforms as well as U.S. brick and mortar retailers participate in this online shopping festival, Alibaba (BABA) continues to dominate. The Chinese e-commerce giant, which had turned this day into the biggest 24-hour spending blitz worldwide, expects over 500 million users to participate in the shopping festival this year, about 100 million more than last year. According to Forrester, Alibaba is expected to bring in gross merchandising value of $37 billion this Singles Day, representing a 20.5% increase. However, this growth is slower than the year-over-year increase of 27% recorded in 2018.

As many as 64 global brands hit $14 million in Alibaba’s preorders, with sales’ records being broken by cosmetic lines, including Lancôme, L'Oréal, Estee Lauder and Olay, and electronics brands such as Apple AAPL, Dyson, Siemens and Philips. Alibaba kicked off this year’s shopping bonanza with performances by American pop star Taylor Swift and local celebrities such as Jackson Yee. Overall sales hit $1 billion in the first minute and eight seconds and reached 84 billion yuan in the first hour, up 22% from last year’s early haul of 69 billion yuan. Alibaba grossed $22.63 billion (158.31 billion yuan) in its first nine hours, up 25% from 126.72 billion yuan at the same point last year. The company raked in sales worth $30 billion on its platforms on Singles’ Day last year, dwarfing the $7.9 billion U.S. online sales for Cyber Monday.

Alibaba’s smaller rivals — JD.com JD and Pinduoduo PDD — also launched their own Singles’ Day deals with heavy discounting to entice buyers to spend on their platforms.

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

This product provides concentrated exposure to the Chinese Internet market by tracking the CSI China Overseas Internet Index. In total, the fund holds 45 securities in its basket with Alibaba, Pinduoduo and JD.com being among the top six firms with a combined 23.5% share. The ETF has amassed $1.8 billion in its asset base and charges 76 bps in annual fees from investors. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Emerging Market ETFs Beating the Broader Market: Here's How).

Emerging Markets Internet & Ecommerce ETF EMQQ

This ETF targets the Internet and ecommerce sectors of the developing world by tracking the Emerging Markets Internet & Ecommerce Index. Holding 69 securities in the basket, Pinduoduo, Alibaba, and JD.com are among the top 10 firms that collectively make up for 22.6% share. The product has accumulated $373.8 million in its asset base and charges 86 bps in annual fees. It has a Zacks ETF Rank #4 (Sell) with a Medium risk outlook but could get a boost from the Singles Day shopping blitz.

UP Fintech China-U.S. Internet Titans ETF TTTN

With AUM of $8.3 million, this ETF offers concentrated exposure of the top 20 prominent Chinese and U.S. internet companies by tracking the Nasdaq China US Internet Tiger Index. Alibaba and JD.com are among the top 10 firms and make up for a combined 12.8% share. TTTN charges 59 bps in annual fees from investors.

Global X MSCI China Consumer Discretionary ETF CHIQ

This product offers exposure to the consumer discretionary sector in China by tracking the MSCI China Consumer Discretionary 10/50 Index. Holding 59 securities in its basket, Alibaba, JD.com and Pinduoduo are among the top 10 firms with a combined 19.2% share. The fund has AUM of $161.7 million and charges 65 bps in annual fees. It has a Zacks ETF Rank #3 with a Medium risk outlook (read: Dump Slowdown Fear, Bet on These China ETFs).

Invesco China Technology ETF CQQQ

This fund targets the overall information technology sector in China and follows the FTSE China Incl A 25% Technology Capped Index, holding 96 stocks in its basket with Alibaba being the top firm at 10.1%. The product manages an asset base of $535.9 million while charges 70 bps in fees per year. It has a Zacks ETF Rank #3 with a High risk outlook.

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