Monex Director discusses some interesting alternative to Facebook, Amazon, Netflix and Google shares
11 July 2018 | Education
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Whenever an Australian investor wants to trade overseas shares, these four companies (sometimes jointly referred to as the FANGs) come to mind. After all, they’re a part of our lives, so we feel connected to them, and there are all these reports about their profit margins. This makes them seem like a sure bet.
If you bought shares in 2012, you’d have paid less than US$20 for Facebook, about US$8 for Netflix, below US$200 for Amazon, or under US$300 for Google. By February 2018, Facebook was trading at US$190. Netflix reached nearly US$400 in June, Amazon recently pushed above US$1,700, while Google is closing in on the US$1,200 region. The FANGs have certainly had a great run.
FANGs vs BATs
Yes, they are likely to soar to greater heights, because they are driven by innovation, technology, and relevance. This keeps them evolving with the times and developing their product base and customer trust. However, as an investor, you may need to look beyond them. You could even look towards the Orient to see what’s available across the ocean.
Consult with your broker for offshore trading and discover viable alternatives. Here at Monex, we’re willing to do one better. We’re willing to share tips straight from the director’s mouth. Our MD Alex Douglas began plotting currency movements by hand in 1983 and has worked in the financial markets for close to 30 years. He offers three alternatives to the FANGs that will provide some international diversification to your portfolio. Collectively, they are known as the BATs (Baidu, Alibaba, and Tencent).
You might have heard that China has its own internet and doesn’t use the same web that the rest of us use. Baidu plays a big part in that framework. It’s a tech company that deals in products and services related to the (Chinese) internet. It’s a multinational company though, so it does operate outside China’s borders, and is said to have close to 2 billion worldwide users. Baidu explores AI, apps, content that can be downloaded, and even a Facebook-like digital advertising platform. In 2013, Baidu shares were below US$85. Recently, the stock pushed above the previous high of US$252 set in November 2014 to probe toward the US$280 region. Baidu trades on NASDAQ under the ticker symbol BIDU.
You may have heard of Alibaba as the Chinese version of Amazon. There’s a business model where merchants check what’s big on Amazon then seek similar items with bigger margins on Alibaba. This has somewhat tainted Alibaba’s reputation. Fortunately, Alibaba is stretching beyond its status as a shopping platform. It’s delving into media and financial services, and is also handling business-to-business transactions. If you’d like to trade Alibaba shares, it is listed on the NYSE with the ticker symbol BABA. In September 2013, trading prices were below US$58 but by January 2018, Alibaba was demanding prices of US$202.60 with recent gains seeing the stock probe above US$210.
Some see Tencent as China’s equivalent of Facebook, but it’s more than that. It has ventures in online commerce, smartphones, music, AI, payment systems, mobile games, and other internet-powered services and products. You can trade Tencent both in US and Hong Kong markets. In 2014, it traded for $HK0.675, but has gone as high as $HK475 in 2018.
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