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Alibaba's Strong Fiscal Q1 Earnings Put These ETFs in Focus

Chinese e-commerce giant Alibaba Group BABA reported strong first-quarter fiscal 2021 results before the opening bell on Aug 20, wherein it beat earnings and revenue expectations.

Earnings of $2.10 per ADS beat the Zacks Consensus Estimate of $1.97 and increased 14.8% year over year. Revenues climbed 34% to $21.76 billion and topped the consensus mark of $21.1 billion. The strong performance was driven by robust growth in commerce and cloud computing business due to digital transformation accelerated by the COVID-19 pandemic.

The company's core commerce business has fully recovered to the pre-COVID-19 levels across the board, gaining 34% in the quarter while cloud computing revenues soared 59%. The digital media and entertainment sector saw modest revenue growth of 9%. Notably, the streaming video business Youku witnessed its daily average subscriber increase 60% year over year (read: 5 ETFs to Play Record-Breaking U.S. Gaming Sales in Q2).

Annual active consumers increased 16 million from the fiscal fourth quarter to reach 742 in the first quarter. Mobile monthly active users in its China retail marketplaces increased 28 million quarter over quarter to 874 million.

Alibaba currently has a Zacks Rank #3 (Hold) and belongs to a top-ranked Zacks industry (placed at top 33% of the total 250+ industries in the Zacks universe).

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 (see: all the Technology ETFs here):

Invesco BLDRS Emerging Markets 50 ADR Index Fund ADRE
 
The product offers exposure to 50 emerging market-based depositary receipts by tracking the S&P/BNY Mellon Emerging Markets 50 ADR Index. About 47.9% of the portfolio is allotted to Chinese firms, with Alibaba occupying the second position at 20.4%. Taiwan, India and Brazil round off the next three spots in terms of country exposure. Consumer discretionary, information technology, communication services and financials are the top four sectors. ADRE has amassed $132.4 million in its asset base while trading in a light volume of about 10,000 shares. It charges 30 bps in fees per year and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook (read: Capture Disruptive Growth in Emerging Markets with This ETF).

iShares MSCI China ETF MCHI

This ETF targets the Chinese stock market and follows the MSCI China Index. Holding 608 securities in its basket, Alibaba takes the top spot with 18.3% share. From a sector look, about 34% of the portfolio is allotted to consumer discretionary while communication (21.3%) and financials (14.7%) round off the next two spots. The fund has amassed $5.9 billion in its asset base while charging 59 bps in annual fees. Volume is also solid as it exchanges nearly 3.7 million shares daily on average. 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 772 stocks in its basket with Alibaba taking the top spot at 17.5%. Consumer discretionary, communication services and financials are the top three sectors. The ETF has amassed $57.1 million in its asset base and sees average daily volume of 12,000 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 1637 stocks in its basket with Alibaba taking the top spot at 14.5%. From a sector look, consumer discretionary takes the largest share at 30.7%, while communication services and financials round off the next two spots. The ETF has amassed $1.4 billion in its asset base and sees average daily volume of 84,000 shares.  It has a Zacks ETF Rank #4 with a Medium risk outlook (read: China ETFs to Gain on Positive Trade Data Amid Coronavirus Crisis).

iShares MSCI BRIC ETF BKF

This ETF offers exposure in four major emerging market countries - Brazil, Russia, India, and China – by tracking the MSCI BRIC Index. Holding 653 stocks in its basket, Alibaba takes the top spot at 13.2% share. The product has amassed $143.1 million in its asset base while trading in a lower volume of around 14,000 shares a day on average. It charges 69 bps in annual fees from investors.

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 second firm accounting for 12.3% share. Consumer discretionary and communication services take the top two spots at 38.7% and 20.4%, respectively, from a sector look. The product has been able to manage $331.5 million in its asset base and trades in volume of 30,000 shares a day on average. It has a Zacks ETF Rank #4 with a Medium risk outlook.

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iShares MSCI China ETF (MCHI): ETF Research Reports
 
Alibaba Group Holding Limited (BABA): Free Stock Analysis Report
 
SPDR SP China ETF (GXC): ETF Research Reports
 
Invesco BLDRS Emerging Markets 50 ADR ETF (ADRE): ETF Research Reports
 
WisdomTree China exStateOwned Enterprises ETF (CXSE): ETF Research Reports
 
iShares MSCI BRIC ETF (BKF): ETF Research Reports
 
Franklin FTSE China ETF (FLCH): ETF Research Reports
 
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Zacks Investment Research
 
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