In a bid to build a Chinese online financial network, Alibaba GroupBABA and its finance affiliate Ant Financial Services Group announced the launch of an e-commerce tracking stock index named CSI Taojin Big Data 100 Index and an online bank called MYbank.
Shares of Alibaba jumped 3.87%, touching a high of $85.54, before closing a notch lower at $85.39.
CSI Taojin Big Data 100 Index
CSI Taojin Big Data 100 Index, which started today, is the first of its kind in China. It comprises 100 mainland Chinese stocks from various sectors including household durables, textiles and apparel, food and hospitality. The stocks will be selected on the basis of sales and transaction data collected and studied via Alibaba's vast e-commerce network.
The Index will consider industries as per the growth rate in online transactions, price levels and the supply-demand condition in China. The Index will be dependent on timely quantitative online payment and transaction data rather than just depending on quarterly earnings.
It will do so by monitoring e-commerce activities including tapping data and keeping an eye on the firms' performance.
So it can change monthly, dropping companies who are underperforming and adding those that are doing better. This will make the Index more reliable and will offer investors with precise and latest information.
MYbank, an Internet bank, is scheduled to be launched in June. The move comes as more and more Internet companies in the country gear up to invade the territory of traditional banks. The launch follows Alibaba's competitor Tencent Holdings Ltd's online bank, WeBank, which began trial operations in January this year.
MYbank got regulatory approval last year. Ant Financial will own a 30% stake in MYbank; subsidiaries of Fosun International Ltd and Wanxiang Group will hold 25% and 18% respectively; Ningbo Jinrun Asset Management will hold 16% and the remainder will be held by other shareholders.
Alibaba is the leading e-commerce company in China and its online payment service Alipay is the most popular payment service. This gives the company access to data pertaining to consumers' and small businesses' finances. The company now plans to monetize the vast amounts of proprietary data it collects from its online trading sites.
Alibaba has significant plans for financial services in China as competition in the space is already heating up.
MYbank and the Index are its steps toward building an online finance platform, which Alibaba believes will take services like banking, loans and credit, insurance, payment systems and investment to a new level and help secure an edge over its rivals.
Stocks to Consider
Alibaba currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the technology space include Linear Technology Corporation LLTC , Groupon, Inc. GRPN and NVIDIA Corporation NVDA , all carrying a Zacks Rank #2 (Buy).
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