Singles Day Beckons for EM E-Commerce ETF – ETF Trends

China’s Singles Day, one of the world’s largest retail events, arrives Thursday. Against the backdrop of heavy regulatory scrutiny that resulted in severe punishment for a slew of previously high-flying Chinese consumer internet stocks, this promises to be a Singles Day unlike any other.

That doesn’t mean that the Emerging Markets Internet and Ecommerce ETF (EMQQ) isn’t a relevant idea this Singles Day. It is, and that’s particularly true as some of EMQQ’s marquee Chinese components are looking to move past Beijing’s wrath and get back to growing their top lines.

“Alibaba’s June-quarter revenue missed estimates for the first time in more than two years, reflecting the toll the government’s campaign is taking. Meanwhile, billionaires including Wang Xing, co-founder of food-delivery giant Meituan, and Lei Jun, co-founder of smartphone-maker Xiaomi Corp., have promised to donate vast sums from their personal fortunes to philanthropic efforts,” reports Bloomberg.

Meituan and Alibaba combine for 15.52% of EMQQ’s weight, according to issuer data. Overall, Chinese stocks represent nearly 62% of the exchange traded fund’s weight, by far the largest geographic allocation in the fund. South Korea is second at 6.6%.

One way that EMQQ’s Chinese member firms can put regulatory headwinds in the rearview mirror is by putting their money where their proverbial mouths are when it comes to contributing to China’s common prosperity plan. Some companies are already doing just that.

“Alibaba said it would give $15.5 billion over five years to foster social equality. The company also pledged to donate 1 yuan ($0.16) when Singles’ Day shoppers buy certain items and post their purchases on social media,” according to Bloomberg.

Another way that EMQQ’s Chinese components can gain favor with the Chinese Communist Party (CCP) is to show overt commitments to carbon-reduction efforts — something that Beijing is prioritizing because the world’s second-largest economy is one of the biggest polluters in the world.

Getting down to the business end of Singles Day and its potential impact, the event, which got its start in Chinese college culture in the 1990s, has long surpassed the sales delivered by Black Friday and Cyber Monday in the U.S.

“Every year has exceeded the one before. Sales last year reached 498 billion yuan ($78 billion), easily surpassing 2019’s $38 billion tally after Alibaba added several days and additional services to the count,” reports Bloomberg.

If that happens again this year and previously established records are topped, EMQQ could benefit.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.