Alibaba Group Holding Ltd (BABA.N) and its finance affiliate accelerated a drive to be a full-fledged Chinese online financial network, with the launch on Thursday of an e-commerce tracking stock index and plans for a June start of an internet bank.
Ant Financial Services Group's CSI Taojin Big Data 100 Index is the first of its kind in the mainland, tracking e-commerce activities to gauge firms' performance, and marrying the China internet shopping giant's data troves with its financial services aspirations.
Also on Thursday, the general manager of Ant's finance division, Yuan Leiming, told Reuters in an interview that online bank MYbank will be launched in June. It comes after Alibaba's arch-rival Tencent Holdings Ltd's (0700.HK) own internet bank, WeBank, began trial operations in January this year.
Alibaba and affiliate Ant have big ambitions for financial services in China, which have traditionally been geared toward larger and state-owned businesses and neglected individuals and smaller enterprises.
For the Ali family, the launch of MYbank and the index are strides toward building an 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 Ant's Alipay online payment service is the country's most popular. Analysts say this gives Alibaba and Ant what is possibly China's best data on consumers' and small businesses' finances.
The companies are now hunting for ways to monetize 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.
Expectations are also high for Ant's eventual IPO, after Alibaba Group's record listing in New York last September. Ant and Alibaba executives have said the finance arm will likely list in mainland China, and people familiar with the matter say it is eyeing a 2017 offering.
An Ant Financial spokeswoman said the company does not comment on its listing timeline nor location.
BIG DATA PROMISE
Ant's new index is composed of 100 stocks in various sectors, it said in a statement.
The index "weighs industries according to the growth in online transactions, price levels and the supply-demand situation in China", making it more timely than depending on quarterly earnings, said Ant.
"We're hoping that our index is going to be stronger than the actual A share market," said Ant's Yuan. The index has grown by about 65 percent since it began its pilot run on Jan. 18, 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 the fund's future popularity, 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, before the index's launch. "The next step is index funds."
Shanghai Gildata Services Inc, a unit of Hundsun Technologies Inc (600570.SS) which is part-owned by Ant, is the third partner in the index venture.
Ant's and Tencent's online banks are among several recently approved privately-owned banks, as Beijing looks to shake up its stodgy and largely state-owned finance industry.
Ant Financial will hold a 30 percent stake in MYbank, which will have various other shareholders. The bank won regulatory approval last year.
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