Alibaba's Yu'e Bao, a wealth management product for individuals, has become one of China's biggest funds since its launch in 2013. Now they are hunting ways for monetize their existing big user data in another financial product. Ant Financial, held by Alibaba’s executives and with financial connections to the parent Alibaba, recently launched the global first e-commerce index, the CSI Taojin Big Data 100 Index. Alibaba partnered with Chinese firms Bosera Asset Management Ltd., Shanghai Gildata Service Inc. and China Securities Index Co. to create and track the index. The index is composed of 100 stocks in sectors of household durables, textiles and apparel, food and hospitality. Big data from Alibaba's E-commerce activities will then be leveraged to determine investment strategies. Criteria include online payment and transaction data, price levels and supply / demand.
The Taojin Big Data fund is actually not the first fund in this space. The CSI Baidu Baifa Strategy 100 Index was jointly introduced by Baidu, China Securities Index Co Ltd and GF Fund Management Co Ltd a number of years ago. The stock selection model relies on Baidu search data results, combined with relevant financial factors, transaction data and fundamentals. All of these data points adjust the stock-picking strategy and the constituent stocks.
The Stock Market indices from Alibaba and Baidu are clearly aimed at helping the giants establish a foot-hold in the Internet wealth management market and fill the gap between big data and Internet technology applications. It also happens to coincide with Beijing’s large state-owned finance industry reform plan - auspicious indeed.