When purchasing goods online, most residents of China head to Alibaba, which processes about 80 percent of China’s total online retail businesses. It has a unique model with Amazon- and eBay-like features and hosts sites for small businesses. Its volume of sales is so massive, Alibaba may overtake Wal-Mart as the world’s largest retail network by 2016, according to CNBC.
As an “undisputed market leader,” Alibaba enjoys revenues that are growing 60 to 70 percent year-over-year, says CLSA. Yahoo! has benefited from its 24 percent stake in Alibaba, and next year, investors could get in on the action if the company goes public.
Michael Ding, portfolio manager of the China Region Fund (USCOX), likes Tencent Holdings, whose subsidiaries provide mass media, Internet and phone services, social media and online advertising. According to CLSA, Tencent is “best positioned for mobile,” due to its app called WeChat.
Users of Tencent’s phone applications may not be all too familiar with an app called SnapChat, but they are feverishly downloading a new app called WeChat. WeChat is a mobile social networking application that allows real time multi-party voice messaging and location sharing, boasting 236 million monthly active users.
Tech in Asia reported that Tencent is now set to open a WeChat office in the Philippines, saying that WeChat “became the most downloaded free app” in the country since June.
Exploring Russia 2.0
Another area of the emerging world benefiting from the growing wealth of the consumer is Russia. In our recent webcast, Tim Steinle, portfolio manager of the Emerging Europe Fund, talked about investing in “Russia 2.0” companies. Whereas familiar Russian companies, such as Gazprom and Lukoil, tend to be large and state-owned, we prefer dynamic, independent, shareholder-driven companies.
For example, Mail.Ru is an Internet company focused on social networks and gaming. Yandex is the dominant Internet portal in Russia in direct competition with Google.ru, the Russian operation of Google. Both companies have been outstanding performers compared to overall Russian stocks in 2013.
To learn more about why we find Russia 2.0 exciting, you can listen to the on-demand webcast here.
Wishing You a Happy Holiday!
During this holiday season, we would like to wish you and your family peace, joy and lots of laughter. We hope the new year brings you health, wealth and happiness.