iNVEZZ.com Wednesday, April 9: Despite closing 2.35 percent higher yesterday and rising an additional 1.41 percent in pre-market trading today, the Global X Social Media ETF (NASDAQ:SOCL) is still more than 18 percent below its 2014 high of $22.85. The exchange-traded fund’s decline is largely the result of the social-media sell-off in China as well as selling pressure in US tech stocks Facebook, LinkedIn and Twitter. About half of SOCL’s assets are invested in the US and a quarter in China.
Tencent – the largest holding of SOCL – yesterday edged up for the first time in five days after the Chinese Internet giant bought its own shares in open market. Shares of the company have plunged by about 17 percent since the beginning of March, erasing around $32 billion from its market capitalisation. “The share buyback is definitely a positive signal for investors as this means the company is optimistic about the future, else it wouldn’t have bought them now,” Hu Jiaming, an analyst at Capital Securities Corp., told Bloomberg. “The stock fell the past few weeks because it rallied too much before and there were over-expectations on what it could deliver. However, fundamentals are still good.” The average price target of 33 analysts from a Bloomberg survey points to an upside for Tencent’s shares of about 26 percent for the next 12 months.
Facebook, SOCL’s second biggest holding with a weighting of 12.43 percent, has also fallen by almost 17 percent over the last month. Russia’s Yandex, the ETF’s 10th largest holding, lost about 11.2 percent. Zynga, LinkedIn, Yelp and Twitter have all seen their shares plummet as investors in the US fled from momentum stocks. The Turkish government’s decision to ban Twitter in the country reinforced the bearish sentiment on social media stocks.
About Global X Social Media Index ETF
SOCL seeks to mimic the investment returns of the Solactive Social Media Index, which tracks companies involved in social networking, file sharing, and other web-based media applications. The fund has total assets of $134.19 million (₤80.16 million) and 7.25 million outstanding shares. As of the end of March, SOCL has returned almost 41 percent to investors. It has a gross expense ratio of 0.65 percent.
As of 13:57 BST buy Global X Social Media ETF at $58.20.
As of 13:57 BST sell Global X Social Media ETF at $58.18.