Deceleration In China Beneficial For Alibaba? This Analyst Thinks So

The Chinese stock market fell 8.5 percent on Monday, its biggest ever decline since 2007, on back of bad economic data.

Some investors are fearing that this meltdown could have serious affect on Alibaba Group Holding Ltd BABA's sales. However, Gil Luria, Wedbush Securities analyst, thinks otherwise.

Luria was on CNBC to explain how deceleration in China might actually benefit Alibaba.

Will Absorb Consumption Growth

"When we talk about China decelerating, we're talking about the overall number and we're taking about investment in infrastructure," Luria began. "One of the important things that's happening in the Chinese economy is that the economy is shifting towards consumption and that is where Alibaba is positioned. Alibaba is the one absorbing all that consumption growth."

He continued, "And in China remember they're not going to be able to scale up malls fast enough and so the consumers are going straight to online commerce, the e-commerce and Alibaba has overwhelming share of it.

"So even though the overall economy is slowing, investment in infrastructure is slowing, the growth in consumption is still spectacular and Alibaba is the greatest beneficiary from that."

Chinese 'Speculators' Are Different From U.S. Investors

Luria was asked isn't there a possibility that the investors who have lost money in the Chinese stock market will start consuming less which will thereby affect Alibaba's sales. He replied, "Unlike Americans that most of our stock market investment is retail investors, 401ks and long-term investment planning, which impacts our future earnings growth. It appears to me from what I've been able to observe that the Chinese retail investor is more a speculative investor."

"They speculate on real estate now they're speculating on the stock market, they'll speculate on something else. It's more like their play money as opposed to their long-term investment and income money. And so even though some of those people will obviously be impacted, it's not as broad as when we have a stock market correction everybody's 401k goes down," Luria concluded.