Emerging Markets and Ecommerce Monthly Report | May

17 May 2021

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  • Anti-trust headlines spilled over from last month as Chinese tech firms continue to adjust to a new wave of increased regulatory scrutiny. Despite this pressure, China’s internet companies still have a long runway of growth ahead of them. Short-term tension around certain rectifiable practices should not disguise that. Charlie Munger put it best during the recent annual Berkshire Hathaway meeting in early May: “The Chinese government will allow businesses to flourish.”       
  • The COVID-19 situation in India has deteriorated over the last month, but the international community has taken notice and action. Despite the dire situation, UBS still anticipates a new wave of Indian tech companies to IPO in the latter half of 2021, helping increase the investible universe of internet stocks in the country. Like so many other countries across the world, COVID-19 has accelerated digital adoption in India and the companies leading that charge locally are gearing up to go public.       
  • EMQQ Launches “EMQQ Evolves,” our distinct approach to ESG. We invite you to learn more by reading our Action Plan and Letter from the Founder, Kevin Carter, 


EMQQ Performance


12 Month*



Past performance is no guarantee of future performance. Source: Bloomberg, HANetf *12 Month figures based on 30.04.20 -30.04.21.


Performance Review

Breakdown of Performance:

The Emerging Markets ETF (EMQQ) has posted a trailing 1-year return over 80% as of April 2021.

April continued the sluggish trend from March, albeit at a decelerated pace. The performance for the month was essentially flat as the market continues to digest Chinese anti-trust headlines. From our vantage point, we continue to view these developments as manageable for the country’s internet companies. We discuss that in more detail below. The leading contributors to EMQQ’s performance CY are Sea Limited and Netease, both posting gains over 26% and 17% respectively. Sea Limited continues to assert its dominance in the Southeast Asian e-commerce scene while its mobile game franchise is picking up pace in international markets. Meanwhile, Netease has managed to fly under the radar of Chinese regulators, ultimately putting less pressure on its share price so far this year.

The two largest detractors for the first four months are Pinduoduo and Kuaishou, dropping over 24% and 33% respectively. Pinduoduo continues to consolidate after a 180%+ return over the last twelve months. Meanwhile, the market continues to digest Kuaishou’s long term strategy as it gradually shifts away from livestreaming and towards other growth avenues, including advertising and e-commerce.  

Past performance is no guarantee of future performance. Source of all data: EMQQ/ Bloomberg


EMQQ Performance









EMQQ Emerging Markets Internet & Ecommerce UCITS ETF (Acc)







EMQQ Emerging Markets Internet & Ecommerce Index™







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 30.04.2021


Industry News

China Anti-Trust: Anti-trust headlines spilled over from last month as Chinese tech firms continue to adjust to a new wave of increased regulatory scrutiny. While Alibaba was slapped with a $2.75 billion fine in April for its forced exclusivity practices,[1] other tech titans like Meituan and Tencent are expected to follow suit. But with close to $70 billion in cash and cash equivalents on its balance sheet, Alibaba should be able to weather the financial penalty quite well. Despite all the brash headlines, the demands of the Chinese regulators do not appear all that unreasonable and the tech industry should be able to adjust quickly once new rules are fully laid out. As we have noted in last month’s note, this new wave of scrutiny is not about regulators trying to stymie growth of the sector, but rather helping it grow in a more sustainable fashion. What is more knee-jerking is the speed at which the regulators are dealing with this. What would take most countries years to address, China will probably tackle in a few months. Nonetheless, the long-term prospects of the sector remain robust. Charlie Munger put it best during the annual Berkshire Hathaway meeting: “The Chinese government will allow businesses to flourish.”

COVID Crisis in India: The COVID crisis in India has become global headlines in recent weeks as the country (like many before it) struggle with the most recent surge in infections. For its part, the international community has responded with aid to help sure up the country’s oxygen shortage, amongst other measures. Despite these tremendous setbacks, India’s robust roster of private tech companies have not been discouraged from pursuing IPOs. Global investment banks like UBS expect activity to accelerate in the second half of the year, helping improve the universe of internet companies in the world’s second largest country.[2]

EMQQ & ESG: In April, EMQQ announced the concrete steps it is taking to create a sustainable organizational model and to advance the EMQQ team’s commitment to Environmental, Social and Governance (ESG) related issues; a plan the team has labelled “EMQQ EVOLVES.”


Constituent News

Kakao and a New Wave of Korean IPOs: April was a busy month for Korean Super-App and EMQQ portfolio company, Kakao Corp. While the company is best known for its widely used social-media platform, KakaoTalk, the company has also incubated a strong roster of ancillary tech businesses. This includes a bourgeoning payments arm, a digital bank and a ride hailing platform to name a few. Like Tencent in China, Kakao has managed to build an impressive portfolio of venture capital investments. The company is increasingly looking to monetize those investments as it prepares to bring more of those private companies to the private market and further enrich the current pool of publicly-traded Korean internet companies.



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.

EMQQ v FAANG: Projected Avg YoY Revenue Growth

 For illustrative purposes only. Source: Bloomberg as of 27.04.2021

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