Alibaba Earnings, Singles' Day Mean Important Stretch For This ETF

November is setting up to be a pivotal month for the KraneShares CSI China Internet ETF (KraneShares Trust (NASDAQ:KWEB)), and that starts Wednesday, when Chinese e-commerce giant Alibaba Group Holding Ltd

China Commerce, E-Commerce

As Benzinga reported Tuesday

The Role Of Alibaba

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According to a report on Yahoo Finance

Alibaba, China's largest e-commerce company, is KWEB's largest holding at 12.3 percent of the ETF's weight. That is over 200 basis points more than KWEB allocates to its second-largest holding, Tencent Holdings Ltdaccording to issuer data

In recent weeks, multiple analysts have issued reports saying they expect Alibaba to report double-digit profit and sales growth for its fiscal second. Thirty-nine analysts follow the company with 35 having the equivalent of a Buy rating on the shares.

Given KWEB's hefty Alibaba exposure, a big post-earnings move for the stock has the potential to move the needle for one of this year's better-performing China ETFs. Not surprisingly, it would benefit KWEB if Alibaba surprises to the upside and ups guidance, particularly because it could force a spate of short covering in the name. Short interest in Alibaba has soared this year as the shares have done the same. At the end of the third quarter, short interest in Alibaba was close to $13 billion, reported the Wall Street Journal

Other Catalysts For KWEB

Wednesday's earnings announcement from Alibaba is not the only significant event that could move KWEB this month. On November 11, China observes Singles' Day, a day devoted to gift-giving among Chinese singles.

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Data suggest that discrepancy is not surprising and is rather logical.

China's ecommerce market size reached $590 billion in 2015, compared to $342 billion in the U.S., according to KraneShares.

Over the past three months, KWEB is higher by 12.7 percent, an advantage of almost 800 basis points over the largest U.S. internet ETF.

Image Credit: By Chrionexfleckeri1350 (Own work) [CC BY-SA 4.0], via Wikimedia Commons