There’s no doubt that social media plays a prominent role in promoting business brands around the globe. China, in particular, is tapping into the potential of social media as a revenue driver for its luxury brands.
Social media apps like Tencent Holding’s WeChat have played a major role in Chinese luxury brands. According to a Barron’s report, “for luxury goods makers, the Chinese social media app and others like it have never been more important.”
The potential outreach of social media apps is translating into big sales for China’s luxury market over the next five years.
“That’s according to a team of analysts led by Luca Solca at AB Bernstein, who estimates China’s 35% share of the luxury goods market in 2019 will soar to 45% or 50% by 2025,” the report added.
“China is the most digitally advanced country in the world, when we look at e-commerce penetration, digital payments penetration, ‘new economy’ concentration. Young Chinese consumers are even more ‘plugged in’, and even more important in driving the present and future fortunes of global luxury brands,” said Solca.
ETFs to Consider
Exchange-traded fund (ETF) investors looking to get social media exposure can look at funds like the Global X Social Media ETF (NasdaqGM: SOCL). SOCL seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Social Media Total Return Index. The index tracks the equity performance of the largest and most liquid companies involved in the social media industry, including companies that provide social networking, file sharing, and other web-based media applications.
With technology and social media as the focus for Chinese equities, here are three China tech ETFs to consider:
- Invesco China Technology ETF (CQQQ ): CQQQ is based on the AlphaShares China Technology Index, which is designed to measure the performance of the investable universe of publicly-traded information technology companies open to foreign investment that are based in mainland China, Hong Kong or Macau.
- Global X MSCI China Information Technology ETF (CHIK): CHIK tries to reflect the performance of the large- and mid-capitalization segments of the MSCI China Index that are classified in the Information Technology Sector as per the Global Industry Classification System.
- KraneShares CSI China Internet Fund (KWEB ): KWEB tracks a portfolio of Chinese internet and internet-related companies. The portfolio includes Chinese internet companies that provide similar services as Google, Facebook, Twitter, eBay and Amazon.