Oil industry faces short-term hurricane impact
While it’s too early to know the full economic and human toll of Hurricane Harvey, we expect a relatively short-term impact on the U.S. energy industry.
As China seeks to shift its economy fueled by heavy industry and exports towards consumer and service-oriented growth, the need for technological advancement leads the charge. China recently hit an important milestone in its internet development. For the first time, more than half of China’s population was online. At the end of 2016, China had 731 million internet users, more than double the population of the United States. China’s new internet users are mobile native, with approximately 95% preferring to surf the web on their smartphones.1 We believe companies able to capitalize on this secular growth trend stand to benefit.
John Maxwell and Catherine Murray, portfolio managers of Ivy International Core Equity Fund, believe an increase in Chinese internet usage will benefit select companies that have dominant market share or are well positioned for increased usage through their online platforms, payments systems and/or e-commerce services.
Below are 3 examples of stocks we believe may benefit from an increase in Chinese internet usage.
Alibaba Group Holding LTD. (BABA, US)
Alibaba Group, through its subsidiaries, provides internet infrastructure, e-commerce, online financial and internet content services. The company’s major businesses include Taobao Marketplace, a consumer-to-consumer retail platform; Tmall.com, a business-to-consumer online retail platform; Alibaba.com, a global wholesale platform for small businesses; Alibaba Cloud Computing, a cloud computing and data management platform developer; and Alipay, an online and mobile payment solution.
As China transitions to a consumer-led economy, we feel that Alibaba is competitively positioned to capitalize on this secular shift.
JD.com is China’s largest online direct sales company (based on transaction volume) and primarily offers electronic, home appliance and general merchandise products, such as audio/ video products and books. The company sells its products directly to customers through its website JD.com and mobile applications.
As JD.com continues to gain market share and grow its user base, we feel the company is well positioned to accelerate revenue growth.
Naspers Limited (NPN: SJ)
Naspers is the 7th largest internet company in the world and has a large ownership interest in Tencent — one of China’s largest and most used internet service portals. Tencent provides internet, mobile and telecom services, with leading platforms such as QQ Instant Messenger, WeChat and Tenpay.
With Naspers’ ownership in Tencent and additional investments in leading platforms in internet, video entertainment and media, we believe the company stands to benefit from the growth in online and mobile technology adoption in emerging markets.
1Source: China Internet Network Information Centre
Past performance is not a guarantee of future results.The opinions expressed are those of the Fund’s portfolio manager and are not meant as investment advice or to predict or project the future performance of any investment product. The opinions are current through June 30, 2017, are subject to change based on market conditions or other factors, and no forecasts can be guaranteed. The holdings discussed are for illustrative purposes only and are not intended as a recommendation to purchase, sell, or hold any specific security or to engage in any investment strategy.
Risk factors: The value of the Fund’s shares will change, and you could lose money on your investment. International investing involves additional risks including currency fluctuations, political or economic conditions affecting the foreign country, and differences in accounting standards and foreign regulations. These risks are magnified in emerging markets. These and other risks are more fully described in the Fund’s prospectus. Not all funds or fund classes may be offered at all broker/dealers.
BABA, US: 1.6%, JD: 1.3%, NPN: SJ, 1.1% of Fund net assets as of 06/30/2017.
Catherine Murray was named a portfolio manager in January 2017. She previously was an assistant portfolio manager on the Fund since 2014.