Monday was singles day for Alibaba and once again it’s Gross Merchandise Value, (GMV) broke new records, hitting just over Rmb 268bn , or $38.3bn. That’s a 26% increase on last year, which in turn had been a 27% increase on the year before. Just for context, the global sales of Starbucks are $24.7bn a year. For further context, Hong Kong’s total retail sales are between US$5 and $6bn a month, or around US$70bn a year. In other words, on Singles Day, Ali Baba sold the equivalent of the entire first half of the year’s total retail sales in Hong Kong.
In some senses this should not be a surprise, for despite almost every article about China appearing to insist it is slowing dramatically, the latest figures shows retail sales up 7.8% in the year to September, providing a still highly favourable tail wind for consumer related companies.
This is the 11th anniversary of Singles Day for Ali Baba and its history charts not only the success of the company but the transformation in the nature of shopping and consumption in China, to a heavily digital but nevertheless ‘omni-Channel’ experience. It is also the first year without it’s charismatic founder Jack Ma, who stepped down earlier this year and in a further bout of symbolism it is set to raise $11bn in an IPO in Hong Kong slated for the end of this month. In what is seen as a welcome boost to the city’s Financial Sector after the troubles so far this year the sale is also offering investors a local listed alternative to big listed rival Tencent.
But this is more than just signalling support for Hong Kong, the move to list more in Asia is clearly part of a strategic move by China generally to derive independent capital market status from the US and from the US$ in particular. Consistent with moves to trade in Rmb for its energy – albeit with the ability to switch to gold – recycling the still vast Chinese savings into Asian rather than western securities is clearly the direction of travel. Remembering the adage that whatever the Chinese make goes down in price but whatever they Chinese buy goes up in price, investors should perhaps take note.
