Emerging Markets and Ecommerce Monthly Report | April

28 April 2021

  • Chinese tech firms have come under increased regulatory scrutiny this month, mirroring the same issues faced by Big Tech in US and European markets. Increased regulation is, however, to be expected for companies that have been innovating at break-neck speeds. Even after a round of potential fines and stricter regulations, China’s digital giants will be able to quickly adjust and still have vast amounts of opportunity ahead of them        
  • Tencent reported a robust set of results with revenues growing 26% year-on-year while the user base of its popular WeChat App jumped to 1.2 billion        
  • Coupang, the “Amazon of South Korea”, was added to the Emerging Markets ETF Q in March via the fast-track IPO rule        
  • China-based Tuya becomes the world’s first AI Internet of Things firm to IPO and also joins the ranks of the Emerging Markets ETF, taking our total count to 98        
  • The International Monetary Fund projects GDP growth in China and India to hit 12.5% and 8.4%, respectively, in 2021        
  • India’s IPO pipeline continues to heat up as Flipkart, the county’s leading e-commerce platform, and Zomato, the local equivalent of Doordash, have signalled they are preparing for IPOs later this year. Meanwhile Nazara Technologies, a company we have flagged in the past, completed its own IPO and becomes the first Indian gaming company to go public


EMQQ Performance



12 Month*



Past performance is no guarantee of future performance. Source: Bloomberg, HANetf * 12 Month figures based on 31.03.20 -31.03.21.


Performance Review

Breakdown of Performance: The Emerging Markets ETF (EMQQ) has posted a trailing 1-year return in excess of 100% as of March 2021 and remains the best performing EM ETF in the category.

Coming off a strong 2020 and first two months of the year, March witnessed a brisk pullback driven by anti-monopoly headlines out of China. We largely view these measures as manageable for the country’s largest tech companies. We discuss that in more detail below. The leading contributors to EMQQ’s performance CY are Naspers and Tencent, both posting gains over 16% and 7% respectively. Both were buoyed by Tencent’s robust Q4 results, which saw sales grow 26% while monthly active users for the company’s WeChat App climbed to over 1.2 billion. Our two largest Korean weights, Naver and Kakao, have also been worthy contributors driven by their solid Q4 results and the strong market debut of Coupang.

The two largest detractors for the two months were Mercadolibre and Pinduoduo, dropping over 12% and 24% respectively. However, with both stocks posting returns north of 200% over the last year, a breather is understandable. Meanwhile, both companies reported strong revenue and user growth numbers in their most recent fourth quarter results.


EMQQ Performance








EMQQ Emerging Markets Internet & Ecommerce UCITS ETF (Acc)







EMQQ Emerging Markets Internet & Ecommerce Index™








As of 31.03.2021

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 / HANetf. Data as of 31/03/2021


Industry News

China Anti-Trust: The anti-trust rhetoric in China picked up further in March. Most of the country’s internet giants have come under increased scrutiny. Over the last few months, we have seen regulators dole out fines for a series of behaviours they deem to be monopolistic in nature. Yet most of these issues appear to be rectifiable in the short term. We predominately see these moves as regulation catching up with rapid innovation rather than trying to stymie them. Even with stricter regulatory frameworks, China’s digital giants have vast amounts of opportunity ahead of them while also giving smaller players room to also prosper. This will perhaps give rise to another subset of interesting consumer and tech companies. Furthermore, If China is to meet its goal of becoming a consumer-oriented, technologically competitive country, it is hard to imagine this happening without a dynamic, innovative private tech sector. The balance of probabilities would suggest that both sides will recognize their symbiotic relationship, and thus reach a sensible compromise.

The Indian IPO Pipeline Heats Up: While India is expected to overtake China in terms of population this decade, it remains under-represented in terms of public internet and e-commerce companies. COVID-19, however, has accelerated the IPO process for several local tech players.  As many as 10 companies could enter the public domain over the next 18 to 24 months. This includes Walmart-backed Flipkart, India’s largest e-commerce company, and Zomato, a popular food ordering platform. Both companies have signalled to the market they are undertaking measures to IPO in 2021.

IMF GDP Projections: The International Monetary Fund raised its China growth forecast to a 10-year high. Its 8.4% growth forecast for China is much higher than other major economies including the United States, Germany and France. The IMF also forecasts India to grow 12.5 percent this year, which would make it the world’s fastest-growing major economy in 2021. While a recent surge in COVID cases poses a threat to these early projections, the IMF suggests we are already seeing signs of normalization across the economy.


Constituent News

Coupang Fast Track Add: Coupang Inc. (NYSE: CPNG) started trading on March 11, 2021 and in the process became the largest foreign IPO on Wall Street Since Alibaba. Coupang is the market leader in Korean e-commerce, with a market share just shy of 25%. The company has cemented its dominance through its “Rocket Delivery” service that ships packages to customers within a day or even hours. Given the scale of the IPO, the company was fast tracked into EMQQ. The fast-track IPO rule allows EMQQ to add new holdings ahead of the normal rebalance whose value exceeds $10 billion upon time of its listing.

Tuya Fast Track Add: Founded in June 2014, Tuya has become a popular global AI + IoT (AIoT) platform, providing global developers, companies, and individuals with one-stop IoT services. The Company’s technology is used to help power smart appliances globally and it processes over 84 billion device requests a day. The Company is backed by Tencent and NEA, the world's largest venture capital firm. Like Coupang, Tuya was fast tracked into EMQQ, taking the count to 98.



The Digital Revolution Just Getting Started: When McKinsey and Co published a research piece back in 2012 on the rising emerging market consumer wave, they called it “the biggest growth opportunity in the history of capitalism”. A hyperbolic claim to be sure but a statement that planted the seed that lead to the creation of EMQQ and now the best barometer to providing the evidence for such a claim. Having posted performance numbers that put the index at the top of its respective category, we see 2021 as a unique tipping point in this global digital revolution story. With China providing the lion’s share of growth in the ecommerce and internet space for the past decade, we are now seeing the second leg of growth coming from geographies that were slower to adoption but comparably powerful in population and scale. The likes of India, Africa, Southeast Asia, and South America will drive the second half of this transformational story as hundreds of millions have yet to obtain a smartphone.

Gen-Z Will Write the Next Chapters: This next wave will come from the world’s youth with 9 out of 10 Gen Z coming from emerging markets. The consumption preferences that will be shaped by this demographic will prefer not to use cash but mobile payments, prefer streaming content over any cable provider, watch more esports than traditional sports, and certainly favour e-commerce over the mall.  

The IPO Party Coming to India: India has taken demonetization efforts and deregulated its financial system to allow for more of its home-grown tech companies to finally IPO on its exchanges. With a healthy pipeline of unicorns and well mature private ecommerce and internet names, we see the Indian tech landscape to have a coming out party and accelerate its domestic representation in the space over the next 12-24 months.

Where the Growth is: Broad based indexes for EM we believe represent a significant value trap being saturated with SOE’s and consequently depressed valuations with little growth. The isolated internet & ecommerce names represent some of the strongest growth rates not just for a few names but the entire sector.  


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