Prospects for China’s SME Sector Fuel Interest in Alibaba.com

Shares in Alibaba.com, China’s largest e-commerce company, are trading at more than twice the company’s offer price after the IPO which raised $1.49bn in Hong Kong this week. The price reflects the high level of interest from investors in one of the regions few e-commerce service sector stocks. Alibaba.com matches Chinese suppliers with international buyers and offers an e-payments system. The web-based lead-generation service is of particular interest to China’s small and medium sized enterprises which have traditionally had limited channels of communication with which to interact with trading partners. Alibaba.com currently has 25 million registered users, and seventeen times more internet traffic than its closest rival.

According to Charlie Awdry, Fund Manager of Gartmore’s China Opportunities Fund, “Privately-owned firms and entrepreneur-led businesses such as Alibaba.com are thriving as the Chinese economy reforms and provides a significant engine for growth for the whole economy. The growth and acceptance of private wealth is driving up disposable incomes and discretionary spending. Gartmore’s China Fund is well positioned to capture this entreprenerial spirit and the growth of the consumer in China.”