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Alibaba Fiscal Q3 Earnings Put These ETFs in Focus


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Chinese e-commerce giant Alibaba Group BABA reported strong third-quarter fiscal 2020 results before the opening bell on Feb 13, wherein it bea t earnings and revenue expectations.

Earnings of $2.28 per ADS beat the Zacks Consensus Estimate by 41 cents and surged 64% year over year. Revenues climbed 38% to $23.19 billion and topped the consensus mark of $22.65 billion. The robust results were driven by a record Singles Day shopping event and growth in the cloud computing businesses (read: 5 ETFs to Tap Alibaba's Record Singles' Day Sales ).

Core e-commerce revenues grew 38% year over year, cloud computing revenues soared 62%, and digital media and entertainment revenues increased 14%. In particular, cloud computing business generated more than RMB10 billion of revenues for the first time in any quarter.  

Annual active consumers increased 18 million from the last quarter to reach 711 million in December. Mobile monthly active users in its China retail marketplaces increased 39 million quarter over quarter to 824 million.

Describing the coronavirus as a "black swan" event, Alibaba warned of a drop in revenues at its key e-commerce businesses for the ongoing quarter as the virus has hits supply chains and deliveries. The delayed return to work following the Lunar New Year due to the epidemic had caused problems for merchants and delays in fulfilling orders (see: all the Technology ETFs here ).

Alibaba currently has a Zacks Rank #3 (Hold) and a VGM Score of C. It belongs to a top-ranked Zacks industry ( top 36% ).

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 44.7% of the portfolio is allotted to Chinese firms with Alibaba occupying the top position at 20.9%. 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 $142.4 million in its asset base while trading in light volume of about 12,000 shares. It charges 18 basis points (bps) in fees per year and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.

iShares MSCI China ETF MCHI

This ETF targets the Chinese stock market and follows the MSCI China Index. Holding 594 securities in its basket, Alibaba takes the top spot with 17.4% share. From a sector look, about 27.5% of the portfolio is allotted to consumer discretionary while communication (22%) and financials (19.1%) and round off the next two spots. The fund has amassed $5.1 billion in its asset base while charging 59 bps in annual fees. Volume is also solid as it exchanges nearly 3.5 million shares on average daily basis. The ETF has a Zacks ETF Rank #3 with a Medium risk outlook (read: ETFs to Tap Alibaba's Stunning Hong Kong Debut )).

Franklin FTSE China ETF FLCH

This product follows the FTSE China Capped Index, charging investors 19 bps in annual points. It holds 770 stocks in its basket with Alibaba taking the top spot at 18.6%. Consumer discretionary, communication services and financials are the top three sectors. The ETF has amassed $40.3 million in its asset base and sees average daily volume of 8,000 shares. It has a Zacks ETF Rank #4 (Sell).

SPDR S&P China ETF GXC

This product follows the S&P China BMI Index, charging investors 59 bps in annual points. It holds 736 stocks in its basket with Alibaba taking the top spot at 14.2%. From a sector look, consumer discretionary takes the largest share at 26.4%, while communication services and financials round off the next two spots. The ETF has amassed $1.4 million in its asset base and sees average daily volume of 95,000 shares.  It has a Zacks ETF Rank #4 with a Medium risk outlook

WisdomTree China ex-State-Owned Enterprises Fund CXSE

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 top firm accounting for 13.1% share. Consumer discretionary and communication services take the top two spots at 26% and 20%, respectively, from a sector look, followed by financials (10%) and healthcare (6%). The product has been able to manage $209.5 million in its asset base and trades in volume of 25,000 shares a day on average. It has a Zacks ETF Rank #4 with a Medium risk outlook.

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 U.S. firms dominate the portfolio with three-fourth share, Chinese firms account for 20.7% with Alibaba taking the second spot and accounting for about 12.4% share. The product has amassed $29.6 million in its asset base while trading in a lower volume of around 12,000 shares a day on average. It charges 58 bps in annual fees from investors (read: 5 ETFs to Ride on Higher Consumer Confidence ).

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iShares MSCI China ETF (MCHI): ETF Research Reports

Alibaba Group Holding Limited (BABA): Free Stock Analysis Report

SPDR S&P China ETF (GXC): ETF Research Reports

Invesco BLDRS Emerging Markets 50 ADR ETF (ADRE): ETF Research Reports

WisdomTree China ex-State-Owned Enterprises ETF (CXSE): ETF Research Reports

Franklin FTSE China ETF (FLCH): ETF Research Reports

ProShares Online Retail ETF (ONLN): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.




This article appears in: Investing , Earnings , ETFs
Referenced Symbols: MCHI , BABA , GXC , ADRE , CXSE



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