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Alibaba's Ant arm launches China's first e-commerce based stock index

Alibaba banners and the Chinese flag outside the New York Stock Exchange on the day of the company's initial public offering.
Adam Jeffery | CNBC
Alibaba banners and the Chinese flag outside the New York Stock Exchange on the day of the company's initial public offering.

Alibaba Group's finance arm launched on Thursday an index that tracks e-commerce activities to gauge firms' performance, marrying the China internet shopping giant's data troves with its financial services aspirations.

The CSI Taojin Big Data 100 Index, the first in China to tap e-commerce data, is composed of 100 stocks in sectors such as household durables, textiles and apparel, food and hospitality, said Ant Financial Services Group in a statement.

The index "weighs industries according to the growth in online transactions, price levels and the supply-demand situation in China", said Ant. It "relies on timely quantitative online payment and transaction data rather than quarterly earnings to provide investors accurate and up-to-date information," the statement said.

Alibaba and Ant have big ambitions for financial services in China, which have traditionally been geared towards larger and state-owned businesses and neglected individuals and smaller enterprises.

The index's launch is a step towards building a full-fledged internet finance platform, which Ant says will open up services like banking, loans and credit, insurance, payment systems and investment to new tiers of Chinese society.

Alibaba is China's biggest e-commerce company, while Alipay, operated by Ant, is the country's dominant online payment platform. Analysts say this gives Alibaba what is possibly China's best data on consumers' and small businesses' finance.

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Alibaba and Ant are now hunting for ways to monetise that data beyond services like Alipay and Yu'e Bao, a wealth management product for individuals which since its launch in 2013 rapidly became one of China's biggest funds.

"We're hoping that our index is going to be stronger than the actual A share market," said Yuan Leiming, Ant's general manager for finance, in an interview with Reuters. Since the index started running as a pilot test on Jan. 18, it has grown by about 65 percent, broadly tracking the A-share market, he said.

Bosera Asset Management, one of Ant's partners in the index venture, will launch a fund and a note linked to the index, Yuan said. But Ant is conservative about how popular the fund will be, given that people still need to witness the value of e-commerce data, and the index has to gain acceptance, he said.

Analysts see the move as the logical next step in Ant's and Alibaba's financial ambitions.

"It's very sensible from Alibaba's perspective because they attacked the money market fund first and have seen huge success," said Howhow Zhang, director at Shanghai-based Z-Ben Advisors, ahead of the index's launch. "The next step is index funds."

Shanghai Gildata Services is the third partner in the index venture.