Performance Review
The Emerging Markets ETF (EMQQ) has
posted a trailing year return of over 80% and remains the best performing EM
ETF in the category. [1]
EMQQ finished the year
strong posting a 6.83% return for the last month of the year to finish at
81.08% YTD. The best contributors to EMQQ for the year were: Pinduoduo of China,
returning well above 300%, MercadoLibre of Argentina and Meituan of China posting
over 190%, JD.com of China, and finally Sea Ltd, the Singapore-based ecommerce
leader returning over 390%. On an absolute basis, the greatest performer in the
Index was Africa’s ecommerce leader Jumia and the greatest detractor was Pheonix
Tree Hlds who’s online real estate rental business suffered in China due to
lockdowns.
As we look to 2021, we want
to cover a few important trends we see impacting the space with wide
implications not just for the Emerging Markets ETF (EMQQ) and Emerging Markets but globally as well. We’ll
touch on the growing push for antitrust regulation on the tech giants of the
world and the implications of loosening IPO rules for India’s numerous unicorns
itching to go public.
Source of all data: EMQQ
/ Bloomberg
Ecommerce
UCITS ETF Performance
December*
|
YTD**
|
6.83%
|
81.08%
|
Past performance is no guarantee of future performance.
Source: Bloomberg, HANetf
* December figures based on 01.12.20 – 31.12.20
**YTD figures based on 01.01.20 - 31.12.20
Too Successful:
Antitrust Regulations Spreading
When McKinsey and Co
published a research piece in 2012 on the rising emerging market consumer wave,
they called it “the biggest growth opportunity in the history of capitalism”.[2] A hyperbolic claim to be sure, but we believe this statement to be well on its
way to proving itself out as EMQQ continues to prove the evidence. The
opportunity of the emerging markets story is far from losing steam, with
projected growth rates, as shown in the graph below, over 30% for 2021.

China and Europe
seem to be the early movers on issuing fines and new regulations; however, much
is still to be determined if going forward, with further protectionism or encouraged
competition being the result. We want domestic ecommerce leaders to develop in
places like Indonesia, Vietnam, South Africa, Argentina, India and the rest. Ultimately
this is not just a China issue as governments across the globe are grappling
with how to manage these new disruptive and highly successful business models.
US names face the same issues with potentially greater implications, given the
global presence, as we see Europe imposing big fines and regulations on the
likes of Amazon and Google, with further regulation sure to come.[3]
2021: The India Take Off
We anticipate 2021 to be India’s ‘coming out party’, as a
sizable list of unicorns look to take advantage of loosening listing
regulations in the country.
With a minimum three years of profitability being required amongst
a host of other high hurtles for fast growing tech names, the Modi government
has become increasingly aggressive in loosening access to capital markets for
domestic names, while increasing protectionist policies on foreign names. For
reference, Amazon did not reach profitability for the first time until 2001
after its launch in May of 1997. As the digitization wave spreads throughout
emerging markets, India seems to be then next major opportunity in the global
fight for the prize of nearly a billion digital consumers are up for grabs. Coupled
with plummeting cost barriers, both in data and smartphone prices, the foundational
elements we saw setting up China 10 years ago appears to be taking shape in
India now as well.

For illustrative purposes
only. Source: https://www.ispreview.co.uk/index.php/2020/05/uk-ranks-59th-out-of-228-countries-for-price-of-1gb-mobile-data.html

For illustrative purposes only. Source: https://newzoo.com/insights/rankings/top-countries-by-smartphone-penetration-and-users/
Total Return NAV to Date (up 31/12/2020)
|
1M
|
3M
|
6M
|
YTD
|
12M
|
Since Inception
|
EMQQ Emerging Markets Internet & Ecommerce UCITS ETF (Acc)
|
6.83%
|
22.92%
|
36.48%
|
81.08%
|
81.08%
|
105.10%
|
EMQQ Emerging Markets Internet and Ecommerce Index (NTR)
|
6.92%
|
23.24%
|
37.17%
|
82.86%
|
82.86%
|
110.98%
|
EMQQ vs Key EM Competitors
Data as of 31/12/2020
For illustrative purposes only. Source: Bloomberg. Data as
of 31/12/2020
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.
Constituent
News
Top 10 Constituents
|
Weight %
|
Pinduoduo Inc
|
8.52%
|
Tencent Holdings Ltd
|
7.14%
|
Alibaba Group Holding Ltd
|
6.72%
|
JD.com Inc
|
6.36%
|
Meituan
|
5.79%
|
MercadoLibre Inc
|
5.64%
|
Naspers Ltd
|
4.84%
|
Baidu Inc
|
4.25%
|
Prosus NV
|
4.14%
|
KE Holdings Inc
|
4.03%
|
Source: Bloomberg / HANetf. Data as of 31/12/20
Region Breakdown
|
Weight
|
Asia
|
78.33%
|
South America
|
9.92%
|
Africa
|
5.12%
|
Europe
|
6.48%
|
MENA
|
0.14%
|
Source: Bloomberg / HANetf. Data as of 31/12/20
Fund Details
The (EMQQ) Emerging Markets ETF, is a UCITS compliant Exchange Traded
Fund domiciled in Ireland.
The
fund 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
|