Emerging and Frontier Markets Monthly Report: Key Takeaways
Global equity markets took a sharp hit in September on the heels of rising interest rates in the U.S and cues of more hikes to come. Emerging markets were not spared. Against this backdrop, the EMQQ Index declined -15.3% with the largest detractors including Tencent (-19%), JD.com (-20%), Alibaba (-17%), Pinduoduo (-12%) and Reliance Industries (-12%). [1]
While it is difficult to assess how much of the bad news is already priced in, it is becoming clearer that valuations in emerging markets are very low. In fact, September marked the longest ever bear market for EM equities. It has been over 590 days since the MSCI EM Index hit its last peak in February 2021, a stretch that even surpasses the dot-com bear market of the early 2000s.[2] This has led some, including Morgan Stanley, to quip that emerging markets have now become “outstandingly cheap.”[3] While US equity indices still hover around 2020 prices, the EMQQ Index is near 2014 levels, which is simply a testament of how poor sentiment has been in the space over the last 18 months.
While markets continue to climb a wall of worry, the fundamental EM tech story remains as resilient as ever. As outlined in the 'Long View' section below, billions of EM consumers are still expected to get access to their first smartphone over the next decade. And while this year has been bumpy, entrepreneurs continue to expand and fine-tune their businesses to capture that growth. While traditional valuation metrics appear fair, this combination of higher smartphone penetration and burgeoning entrepreneurship in EM are the biggest value drivers of companies across the EMQQ Global universe.
Please note that all performance figures are showing net data. Past performance is not indicative of future performance and when you invest in ETFs your capital is at risk.
Valuation Update
After a difficult 18 months, interest in emerging markets appear to be regaining traction. Morgan Stanley recently raised EM to 'Overweight' after suggesting that the space is close to completing its prolonged bear market cycle. We, for our part, agree that valuations are very subdued. Below are few update charts on the current state of valuations for the EMQQ Index.
We always welcome conversations around valuations. To that end we have prepared a series of decks to address investor concerns on these topics. If interested in receiving a copy or discussing further, please reach out to a member of the team.

All performance figures are showing net data. Please remember that past performance is not indicative of future performance, and when you invest in ETFs, your capital is at risk.
India Rising
India continues to be one of brighter spots across both EM and the world. In fact, India equities have managed to outperform both developed and emerging markets indices so far this year.[5] The country’s expanding local investor base, relatively modest inflation levels, strong demographic trends, and GDP growth in excess of 6% this year has helped the country insulate itself from the broader global malaise.
After eclipsing the UK earlier this year, India remains on pace to overtake Japan and Germany to become the world’s third largest economy before end of this decade.[6] Within that same time span, it is expected to pass China as the world’s most populous country. The country’s manufacturing base holds tremendous promise as more global supply chains diversify further into South and Southeast Asia. This has motivated global companies like Apple to begin manufacturing iPhones locally in the country. By 2025, JP Morgan estimates that Apple could make up to 25% of all its smartphones in India. [7]
But above all else, the potential for increased digitization is the most exciting part of the India story. The country’s smartphone market is expected to reach over 1 billion users by 2026 according to a recent study by Deloitte.[8] Indians are already amongst some of the biggest consumers of data in the world and as the costs of accessing the internet continue to drop, this trend will likely ensue.[9] These are the long-duration tailwinds that will help drive growth for the Indian companies currently in the Index and for the growing wave of Indian startups that are expected to IPO in coming years. This includes e-commerce leader Flipkart Inc, Insurtech firm Digit, Airbnb-equivalent Oyo, travel tech firm Ixigo, food delivery firm Swiggy and furniture e-tailer Pepperfry to name a few.[10] The size and breath of the public Indian Internet space is still very small relative to the opportunity, but we expect that to evolve further over time.
For these reasons an increasing number of financial pundits now view India as a potential standalone investment destination.[11] Combining that with the how early India is in its internet trajectory, we launched The India and Ecommerce Index earlier this year to help investors better access and understand one of the most exciting growth stories in the world today. For materials on the Index, please reach out to a member of the team.
Macro Outlook
The chart below helps visualize the long-term smartphone opportunity in emerging markets. As we can see, the number of smartphone users in EM is expected to dwarf that of developed markets over the next few decades.
For illustrative purposes only. Please note that all performance figures are showing net data. Past performance is not indicative of future performance and when you invest in ETFs your capital is at risk.

All performance figures are showing net data. Please remember that past performance is not indicative of future performance, and when you invest in ETFs, your capital is at risk.
Emerging Markets ETF and Index Performance (As of 30.09.2022)
|
1M
|
3M
|
6M
|
YTD
|
1Y
|
2Y
|
3Y
|
SI
|
EMQQ Emerging Markets Internet & Ecommerce UCITS ETF
|
-15.27%
|
-16.95%
|
-19.34%
|
-37.78%
|
-46.37%
|
-48.75%
|
-14.08%
|
-14.48%
|
EMQQ Emerging Markets Internet & Ecommerce Index™
|
-15.34%
|
-17.02%
|
-19.30%
|
-37.50%
|
-45.80%
|
-47.70%
|
-11.43%
|
-10.46%
|
Frontier Markets ETF and Index Performance (As of 30.09.2022)
|
1M
|
3M
|
6M
|
YTD
|
1Y
|
SI
|
FMQQ Next Frontier Internet & Ecommerce ESG-S UCITS ETF
|
-12.26%
|
-6.50%
|
-39.11%
|
-50.50%
|
N/A
|
-50.50%
|
FMQQ Next Frontier Internet & Ecommerce Index™
|
-12.28%
|
-6.20%
|
-38.45%
|
-55.14%
|
-63.12%
|
-50.50%
|
Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/09/2022. Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product.
Learn more about our Emerging Markets ETF
Learn more about our Frontier Markets ETF