Wide-moat Alibaba has had a summer to forget, with shares falling 22 per cent to $164 per ADR after reaching an all-time high of $211 in mid-June.

The timing of the sell-off coincides with tariff announcements on Chinese goods by the United States and subsequent retaliatory tariffs on US goods by China. However, we believe that negative trade war headlines have been masking many of the positive steps that the company has taken to increase engagement among its existing user base and incubate new potential avenues of revenue. We remain comfortable with our $240 fair value estimate, and believe Alibaba is one of the more undervalued investment stories in the consumer category.

We share management's views that the impact of trade wars will be muted. Morningstar's 10-year economic outlook for China calls for a slowdown in China GDP growth rates to the 4 per cent range, but still being driven heavily by household consumption rates as opposed to government consumption or export activity. Coupled with relatively healthy Chinese household balance sheets and easier access to capital, we don't see any major impediments to consumer spending in the region other than trade war headline risk, adding conviction to our longer-term revenue growth assumptions.