- The appetite for IPO’s in the space has grown significantly with a
robust pipeline of unicorns announcing intentions to go public
- Shanghai’s recent STAR market performance has proven the appetite of the
retail dominated investor base for these new Chinese tech listings
- Possibly the largest IPO in history, the Ant Group’s listing is a
preview of the future fintech growth to come in other EM geographies, showing
the scale of digital transformation underway in the developing world
- Our Emerging Markets ETF looks to be increasing its India exposure as Paytm, Zamoto, Delhivery, FlipKart
and others are all looking to go public
- The US China conflict continues to deepen as the US threatens banning
the Chinese chip maker SMIC[1]
- IMF’s latest GDP growth for 2020 puts Emerging and Frontier economies at
-1%, with Advanced economies at -6% for 2020[2]
Performance Review
The Emerging Markets and Ecommerce UCITS ETF (EMQQ) has posted a trailing year return of over 65% and
remains the best performing EM ETF in the category.[3]
The Emerging Markets ETF finally took a
breather in September after its relentless rebound from the March lows to
finish a choppy month down -4.0%. The best 5 contributors were, Meituan
Dianping (China), MercadoLibre (Argentina) Pinduoduo (China), JD.com (China),
and Sea Ltd (Singapore), showcasing the geographic diversity of growth as they
have all benefited from the rapid consumer behaviour changes driven by the
pandemic. One of the leading underperformers has, unsurprisingly, been the
travel and ticketing leader in China; Trip.com. However, given the Chinese
government’s recent push for domestic travel during the national holiday and Mid-Autumn
festival, we anticipate somewhat of a rebound for these names and another
indicator of how the recovery is diverging at a greater rate between Asia and
the West.
With the coming Ant
Group IPO and the resulting coming out party for China’s fintech leader, it is
important to highlight how the digital payments story has spread throughout
EMQQ’s holdings and thriving throughout emerging economies.
Emerging Markets Internet and Ecommerce UCITS ETF Performance
September* |
YTD** |
12 Month*** |
-4.08% |
47.32% |
67.64% |
Past performance is no guarantee of future performance. Source: Bloombger, HANetf
* Sept figures based on
01.09.20 – 30.09.20
**YTD figures based on
01.01.20 - 30.09.20
***12 Month figures based on 30.09.19
-30.09.20
The growth opportunity presented by Ant should serve as an indicator of what’s to come in other geographies like India’s Paytm, South America’s MercadoLlibre and StoneCo, Africa’s Jumia, and Eastern Europe’s Yandex which are all aggressively expanding in the space.
On the cusp of a digital
revolution, emerging markets are only now beginning to transform consumer
behaviours in a way that is allowing all areas of the economy to be impacted;
be it healthcare, education, banking, and even how we shop for groceries. With
fintech at the heart of all these transactions, the potential for the space is
significant and will continue to prove McKinsey and Co’s prediction back in
2012 that the emerging market consumer wave will be “the biggest
growth opportunity in the history of capitalism”.[4]
As the digitisation wave
spreads, India seems to be then next major opportunity in the global fight for
the prize of a billion digital consumers up for grabs. The only difference to
China is that India is a more open market and there is intense international
competition. This potential is not lost on the Indian government, however, as
Modi appears to be moving in the Chinese direction of protectionist policies as
he recognises the incredible domestic potential to incubating homegrown names
over global rivals.

For illustrative purposes only. Source: NASSCOM Insights, 2020
The UPI or Unified
Payments Interface, established in 2016 to facilitate digital and mobile based
payments, has seen strong growth amongst the connected population, yet with
still only 25% of their 1.4 billion population connected via a smartphone, the
lions share of upside still remains.[5]

The Emerging Markets Internet and Ecommerce UCITS ETF
|
1M |
3M |
6M |
YTD |
12M |
Since Inception |
EMQQ Emerging Markets Internet & Ecommerce UCITS ETF (Acc) |
-4.08% |
11.04% |
64.25% |
47.31% |
67.64% |
66.68% |
EMQQ Emerging Markets Internet and Ecommerce Index (NTR) |
-4.03% |
11.30% |
65.01% |
48.38% |
69.35% |
71.20% |
EMQQ Index vs Key EM Competitors - as of 30/09/2020 (For illustrative purposes only)

Source: Bloomberg, September 30,
2020
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.
Industry News
Ant Group IPO: Anticipated to be one of if the largest IPO’s in history, Alibaba’s
fintech arm Ant Financial is looking to forgo the trend of recent years of
listing in the U.S. and instead targeting a HK and Shanghai listing.[6]
DiDi IPO: One of the largest private companies in the world, the ride hailing
unicorn from China is rumoured to be getting pressure from investors like
SoftBank and Hillhouse to go public. A target of October or November could be
the window and most likely listing in HK due to the recent China/US tensions.[7]
India Increasing Domestic Technology
Protection: Following a fatal
military skirmish on the northern border with China, India’s Modi has moved to
retaliate in blocking a number of Chinese made apps within the country. The move
has proven a strategic one as Modi’s government has taken stronger action to
protect domestic tech companies as well as a political push back on the
Chinese.[8]
Constituent News
Top 10 Constituents
|
Weight %
|
Alibaba Group Holding Ltd
|
8.79%
|
Meituan Dianping
|
8.31%
|
Tencent Holdings Ltd
|
7.25%
|
Naspers Ltd
|
6.09%
|
MercadoLibre Inc
|
5.91%
|
JD.com Inc
|
4.98%
|
NAVER Corp
|
4.85%
|
Pinduoduo Inc
|
4.73%
|
Prosus NV
|
4.31%
|
NetEase Inc
|
4.15%
|
Region Breakdown
|
Weight
|
Asia
|
77.88%
|
South America
|
9.12%
|
Africa
|
6.47%
|
Europe
|
6.53%
|
Sector Breakdown
|
Weight
|
Information Technology
|
5.95%
|
Financials
|
1.19%
|
Industrials
|
0.56%
|
Communication Services
|
39.04%
|
Consumer Discretionary
|
50.22%
|
Health Care
|
3.03%
|
Source: Bloomberg/ HANetf. Data as of 30/09/2020
Fund Details
EMQQ
Emerging Markets and Ecommerce UCITS ETF, is a UCITS compliant Exchange Traded
Fund domiciled in Ireland.
The Emerging Markets ETF tracks an index of leading internet and Ecommerce companies that serve
emerging markets, including search engines, online retailers, social networks,
online video, online gaming, e-payment systems and online travel. The fund
seeks to provide exposure to the growth of online consumption in the developing
world.
Please
remember that the value of your investment may go down as well as up and past
performance is no indication of future performance.
EXCHANGE |
BB CODE |
RIC |
ISIN |
CURRENCY |
INCOME |
London Stock Exchange
|
EMQQ LN
|
EMQQ.L
|
IE00BFYN8Y92
|
USD
|
Acc
|
London Stock Exchange
|
EMQP LN
|
EMQP.L
|
IE00BFYN8Y92
|
GBP
|
Acc
|
Borsa Italiana
|
EMQQ IM
|
EMQQ.MI
|
IE00BFYN8Y92
|
EUR
|
Acc
|
XETRA
|
EMQQ GY
|
EMQ1.DE
|
DE000A2N5XA8
|
EUR
|
Acc
|
SIX
|
EMQQ SW
|
EMQQ.S
|
IE00BFYN8Y92
|
CHF
|
Acc
|
Click here to download the Emerging Markets Internet and Ecommerce Monthly Report Report.