Home / Mobile / Options Market Likes China's Mobile-First Revolution – Bloomberg

Options Market Likes China's Mobile-First Revolution – Bloomberg

China is no stranger to revolution, be it cultural, political or economic. But the ready adoption of a mobile-first approach to technology, which has propelled the most populous country to the global forefront — and storefront — of the digital age, may be the most far-reaching reformation yet.

China’s online search, e-commerce and content landscape is dominated by Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd., collectively known as the BATs. In May, Alibaba and Tencent joined a group of 11 titans with a market value of more than $300 billion, ranking seventh and 10th on that measure. The first five names on the list are, in order, Apple Inc., Google parent Alphabet Inc., Microsoft Corp., Amazon.com Inc. and Facebook Inc.

The options market indicates the BATs can close the gap on the FAANGs, an acronym standing for Facebook, Apple, Amazon, Netflix Inc. and Google. Options provide efficient estimates of the market’s assessment of whether asset prices are more likely to rise or fall. Using options prices to garner information about the distribution of future outcomes is similar to using crowdsourcing to gather data. Market prices convey important information about changing risks.

According to China Internet Network Information Center, 723.6 million people out of a population of about 1.36 billion access the internet via a mobile phone. That’s double the population of the U.S. and about a third more than the number of people in the European Union.

Online sales reached $750 billion in 2016, according to China’s National Bureau of Statistics, more than the U.S. and U.K. combined, and are set to grow by 20 percent annually through 2022, twice the pace of the U.K. and U.S., with mobile accounting for 74 percent of the total by 2020, compared with 46 percent in the U.S.

Baidu is the country’s dominant search engine, Alibaba’s Taobao and TMall marketplaces control online shopping with 529 million mobile monthly active users, while a third of WeChat’s 963 million monthly active users access the Tencent app for four hours or more a day.

With WeChat, users can find a doctor by location, discipline and price; book an appointment; pay for treatment; and order prescriptions for delivery. In a restaurant, users bring up the menu on their phone, from where they order and pay. After eating, the app can book movie tickets and a ride to the theater. To settle with friends, users transfer money between accounts. In return, Tencent gets all that data.


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