After months of speculation, Chinese e-commerce giant Alibaba
Group finally decided to go public on a U.S. exchange rather than
in Hong Kong and plans to file an IPO next month.
Alibaba is expected to raise $15 billion through its IPO, which
could value the company at more than $130 billion, according to the
New York Times. The offering would be the second largest in history
's $16 billion offering in May 2012. The company is expected to
list on a U.S. stock exchange in the third quarter (read:
China ETFs Slump on Terrible Export Numbers
Alibaba is one of the world's biggest Internet companies that
provide marketplace platforms similar to eBay Inc. (
), PayPal Inc. and Google Inc. (
), allowing merchants to sell goods directly to consumers. Notably,
the company occupies 80% of the Internet e-commerce market in
The online giant swung to a profit of $792 million in the third
quarter from a net loss of $246 million in the year-ago quarter.
Though revenue growth slowed from 61% in the second quarter to 51%
in the third, it still outpaced many of its major rivals such as
the 34% revenue growth at Tencet Holdings (
), 24% growth at Amazon.com (
) and 12% growth at Google.
The public launch would likely benefit from China's booming
Internet market and would boost the company's global presence as
well. Additionally, the IPO will be a boon for Yahoo Inc. (
), which owns a 24% stake in this Chinese Internet giant (read:
Guide to China Technology ETFs
Though the company has not yet revealed whether it will trade on
the New York Stock Exchange or Nasdaq, the following ETFs might be
in focus in the coming days ahead of the IPO and see busy trading.
Also, these ETFs are considered safe bets for investors seeking to
avoid single stock risk while participating in the potential upside
offered by the new e-commerce giant's going public act.
KraneShares CSI China Internet Fund (
This ETF is newly debuted in the China ETF space, having amassed an
impressive $75 million in AUM in just eight months. It provides
concentrated exposure to the Chinese Internet market by tracking
the CSI China Overseas Internet Index (read:
China Internet ETF: The Best Choice in the
Holding 28 stocks, the product allocates a combined 22.4% of assets
to TCEHY, QIHO 360 Technology (
) and Baidu.com (
). Alibaba is expected to find its entry into the fund's roster
within 11 days of the company's IPO.
The fund is slightly expensive, charging 68 bps in fees per year.
Additionally, it trades in a moderate volume of over 53,000 shares
a day, ensuring extra cost in the form of bid/ask spread. KWEB
gained over 13% so far this year.
PowerShares Golden Dragon China Portfolio (
This fund might also add Alibaba to its portfolio as it looks to
track the performance of the U.S. listed companies that derive the
majority of revenues from China. It follows the Nasdaq Golden
Dragon China Index and holds 71 stocks in its basket. The product
has amassed $3187.7 million in its asset base and sees moderate
average daily volume of nearly 158,000 shares. Expense ratio came
in at 0.70%.
More than half of the portfolio is allocated to information
technology, followed by consumer discretionary (22.18%). Other
sectors receive minor allocations in the portfolio. The top three
holdings include QIHU, Ctrip.com International (
) and BIDU.
The product added nearly 3.6% in the year-to-date timeframe and has
a Zacks Rank of 3 or 'Hold' rating.
Renaissance IPO ETF (
This fund provides an exposure to the largest and most liquid newly
listed companies by tracking the Renaissance IPO Index. New
companies seek inclusion on a 'fast entry basis' on the fifth day
of trading. The fund holds 61 stocks and has attracted $25.4
million in AUM since its debut five months back.
Currently, FB and Zoetis (
) are the top two firms making up for nearly 10% share each. From a
sector look, technology stocks make up for more than one-fourth of
the basket while financials, oil & gas and healthcare take the
next three spots.
The ETF trades in light volumes of less than 44,000 shares,
probably ensuring additional cost beyond the expense ratio of
0.60%. Renaissance IPO is up nearly 6% in the year-to-date time
Can IPO ETFs Remain Hot in 2014?
SPDR S&P Emerging Market ETF (
This fund targets the broad emerging market space by tracking the
S&P Emerging BMI Index, which looks to invest in American
depositary receipts of Chinese companies. GMM could be at the
forefront to add Alibaba to its portfolio if the latter goes public
all the Broad Emerging Market ETFs here
Holding 938 stocks in its basket, the product is widely spread out
across each security as none holds a more than 2.6% share. Chinese
firms dominate the fund's portfolio at nearly 23%, closely followed
by Taiwan (15.12%) and Brazil (10.83%). From a sector look,
financials takes the top spot with a one-fourth share while
information technology and energy round off the next two spots with
The fund has accumulated $186.7 million and charges 59 bps in
annual fees and expenses. Volume is light as it trades in less than
33,000 shares a day on average. The ETF lost 6.5% in the
year-to-date timeframe and has a Zacks Rank of 3 or 'Hold' rating.
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AMAZON.COM INC (AMZN): Free Stock Analysis
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SPDR-SP EMG MKT (GMM): ETF Research Reports
GOOGLE INC-CL A (GOOG): Free Stock Analysis
RENAIS-IPO ETF (IPO): ETF Research Reports
KRANS-C CHN INT (KWEB): ETF Research Reports
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