Big Data leads to first e-commerce stock index

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China’s e-commerce giant Alibaba has revenues that run in the billions, but the company’s real goldmine is the huge volumes of data generated by its online retailers and consumers. Digging down in that goldmine, Alibaba’s financial affiliate, Ant Financial Services Group, has brought to the surface an innovative economic index that paints a picture of the status of China’s economy as seen through the performance of some of the country’s largest online retailers. The Ant Financial Services Group's CSI Taojin Big Data 100 Index does this by collecting and analysing big data from e-payments provider Alipay.Ant Financial Services Group's CSI Taojin Big Data 100 Index is made up of 100 A-share stocks across a range of industries. In addition to tracking share-price movements the new index also analyses online sales data in real time and combines the information with offline financial data on constituent companies to keep the index continuously updated. It’s the first index of its kind in the mainland.

Alibaba is China's biggest online shopping company, Ants Financial is Alibaba’s financial arm and Alipay is the company’s online payment service. Alipay, a subsidiary of Ant Financial, is used by most consumers in China, generating huge volumes of tell-tale data. Metrics that are tracked include the number of unique page views for product listings, store traffic volume, the rate at which people who click on a product link buy the item, and average transactional prices.

The e-commerce tracking stock index and Ant’s planned online MYbank to be launched in June is the latest development in Chinese company’s aim to provide full-fledged financial services online.

Ant Financial works with Bosera Asset Management, Shanghai Gildata Service and China Securities in its venture into the asset-management industry.

Yuan Leiming, general manager of Ant Financial’s finance department, told the Wall Street Journal that the firm aims to meet demand for wealth-management services from ordinary Chinese that traditional financial institutions aren’t providing. The company is developing investment products that will be linked to the index. In a statement Ant Financial announced that Bosera Asset Management will launch two financial products based on the CSI Taojin Big Data 100 Index, making them available to individuals and SMEs on Zhao Cai Bao, Ant Financial’s online sales platform for third-party financial institutions.

Ant Financial received permission from the Chinese government to set up a private bank in September 2014. At the time Ant officials expressed their plans provide accessible financial services to consumers and small businesses, two groups that are widely thought to be underserved by China’s giant state-owned financial institutions.

Ant Financial is not the only internet company that is moving into the financial services sector in China. Tencent received the go ahead to establish a private bank in July. Juneyao Group, which controls Shanghai-based Juneyao Airlines had its application approved in September 2014.

Beijing is allowing the formation of new banks to foster competition and innovation in financial services, and to stimulate greater capital flow to neglected economic sectors.