Alibaba Group Holding Ltd Finance Arm Starts E-commerce Based Stock Index

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Chinese e-commerce giant Alibaba’s financial service arm Ant Financial announced Thursday the launch of China’s first e-commerce based stock index. The move takes Alibaba one step closer to leveraging its vast proprietary data to realize its financial services aspirations. The CSI Taojin Big Data 100 Index will track shares based on e-commerce metrics.

The index is more timely than quarterly earnings

Ant Financial said the index will gauge the performance of the top 100 Chinese stocks across nearly three dozen sectors including textiles and apparel, consumer durables, food and hospitality. It evaluates industries based on the growth in online transactions, sales volume, the supply-demand situation and price levels.

Ant says the index relies on “timely quantitative online payment and transaction data” instead of quarterly earnings to provide investors up-to-date and accurate information. Alibaba has big aspirations for the financial services sector. In China, most financial services firms have focused on state-run, larger businesses, ignoring individuals and smaller entities. Alibaba and Ant see it as a big opportunity.

Yuan Leiming, the general manager of Ant Financial’s finance unit, told Reuters that the company will launch its online bank called MYBank in June. Alibaba’s biggest rival Tencent has already launched its own Internet bank called WeBank. Leiming said the launch of the index will help the company build a full-fledged Internet finance platform that will offer services like loan & credit, banking, insurance and payment systems.

Alibaba has the best data on individuals’ and small businesses’ finance

Ant Financial operates Alipay, the largest online payment platform in China. It gives Alibaba the best possible data on the finances of Chinese consumers and small businesses. In 2013, Alibaba launched Yu’e Bao, a wealth management product for individuals, in order to monetize its data. Yu’e Bao has since grown to become one of China’s largest funds.

Yuan Leiming said he expected the new e-commerce based index to be stronger than the actual A share market. Ant Financial’s partner in the index venture, Bosera Asset Management, will launch a note and a fund linked to the index.

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