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The Great Confluence Picks Up Speed | Emerging Markets Internet & Ecommerce Update | EMQQ

 

Key Takeaways

  • EMQQ’s sector and companies within are a net benefactor of the pandemic
  • The “Great Confluence” story has accelerated out of necessity
  • China appears to be through the worst and well ahead of most in reopening
  • Growing concern on China backlash as blame game ramps up here in U.S.

 

EMQQ has performed in a defensive manor through the pandemic and appears to now have most of its exposure to the one country that’s better managed and recovered faster than most other major nations in the world. In a relative world, EMQQ is optimally positioned to benefit both short term and long as consumers and economies look to make permanent changes in a direction favourable to EMQQ.

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. Source: Bloomberg / Big Tree Capital. Data as of 06/04/20.

Constituent News

JD.com will be the first of the big Chinese holdings to report on May 8th. Most companies are pulling estimates and forecasts for the quarter however.

With President Xi’s announcement last year of the need to “seize the opportunities” presented by new technology. He announced this week the creation of the “National Blockchain and Distributed Accounting Technology Standardisation Technical Committee.” The group consists of JD, Huaweii, Tencent, Baidu, Ant Financial and are all tasked at leading the standardisation of blockchain technology.

Top 10 Constituents and Regional Breakdown

Industry News - Macro Developments

The Great Confluence Picks Up Speed

COVID-19 has accelerated an already precipitous trend of a rapidly digitising consumer in EM as the digital revolution becomes a necessity or even mandated in many countries. Still Early with only half the world online at the end of 2019. India only at ~30% of population using smartphones, with ~5,000 new smartphone users every hour coming online vs ~100 in the US.

India is the Big Risk & Opportunity Right Now

A severely underdeveloped healthcare system, coupled with some of the most densely populated regions in the world, could spell disaster if virus gets a footing. The strict social distancing measures and contact tracing advantages China had are slim to none in India. 

With points of pain only amplified by the quarantine environment, the desire and need for a more digitised consumption behaviour is accelerated. Coming off a lower base, the adoption and user growth will be immense. Example: <5% of Indians hold credit cards, <2% own cars, and only ~30% of the country owns a smartphone.

India and China Projected to be Only Positive Growth Areas for 2020: (GDP: 1.9% & 1.2%)

IMF released updated report last week with GDP growth projections for 2020 to be -1% for EM and -6.1% for Developed

Find out more about the Emerging Markets Internet and Ecommerce UCITS ETF (EMQQ)

 

Date: 29th April 2020.

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