EMQQ ETF : Market Leading Emerging Market Fund Highlights Rapid Structural Shift to E-commerce in Latin American due to Coronavirus …
Kevin T. Carter, Founder & CIO of EMQQ
– The Internet & e-commerce sector will continue to be the net beneficiary of shifting consumer behaviour brought on by Covid-19
– The secular trends of billions of consumers in EM shifting towards more digitized lifestyles has only accelerated and will stabilize at a much higher level on the other side as seen by the strong revenue growth reported in the latest earnings
– EMQQ UCITS ETF delivered a 12 month return of 36.38% between 1st June 2019 and 31st May 2020
– 9 new constituents added and 3 removed in semi-annual re-balance
The market leading Emerging Markets and Ecommerce UCITS ETF (EMQQ), which is listed on the LSE, XETRA, and Borsa Italiana, says the Coronavirus pandemic is driving consumer behaviour online at an accelerated rate, and that demographics and regions that have remained slow or even resistant to adopting a more digitized lifestyle seem to have relented and started to convert.
This represents an opportunity for investors, especially in Latin America where EMQQ says Coronavirus could have the same effect on the region’s e-commerce sector that SARs did on China’s in the early 2000s.
EMQQ, which delivered a 12 month return of 36.38% between 1st June 2019 and 31st May 2020 (source: Bloomberg), continues to hold the number one spot for all emerging market ETFs for one year, three year and five year performance says Latin America, where online retail sales only account for 5% of total sales, is expected to surge to 25% in one decade.
Kevin T. Carter, Founder & CIO of EMQQ said: “Projections of growth in e-commerce highlight the potential that exists not just in the more mature e-commerce market of China, but the likes of Brazil, Chile, Mexico, Indonesia, India, Vietnam and many other geographies now incentivised to accelerate their mobile adoption rates. With the pandemic driving consumer behaviour online at an accelerated rate, demographics and regions that have remained slow or even resistant to adopting a more digitized lifestyle seem to have relented and started to convert.”
Spearheading EMQQ’s strong performance has been the Latin American leader in e-commerce and Argentinian based Mercadolibre (MELI). After posting a return of over 45% for the month of May, MELI rose to be the largest weighting in EMQQ at the end of the month.
With the virus continuing to spread in Brazil and elsewhere in Central and South America, MELI has disproportionately benefited over competitors due to its more robust supply chains and logistics management that’s been capable of meeting the tremendous surge in demand.
Kevin T. Carter, said: “Mercadolibre represents how the macro conditions that continue to drive China’s digitization, are also being felt throughout developing economies, but offering the possibility of even greater upside as they come off a much lower base and much earlier in their digitization cycle.
“In Latin America, only 34% of consumers under the age of 15 buy goods online, compared to the 74% in the UK and just over 60% in China. This adoption gap is closing fast however as the virus has created an extra incentive and catalysing growth.”
9 new constituents added in semi-annual re-balance
The Emerging Market Internet & Ecommerce Index, EMQQ completed its semiannual rebalance on June 19th 2020, having added 9 new constituents and the removal of 3, resulting in a total of 86 holdings
Being market cap weighted at 8% resulted in Alibaba (BABA) and Tencent (0700) being reweighted to the top two holdings at 8.0% and 7.7% respectively. After being the best performer for the recent period, rising to the largest holding, Argentina based MercadoLibre (MELI) was rebalanced back down to the 5th largest holding at a 6% weight.
Notable additions to the index include Alibaba Health (0241) which is the flagship health care platform of parent Alibaba, who has benefited from the global pandemic as consumers moved online for medical advice and medications. The company was already experiencing healthy revenue growth, but the current environment propelled recent adoption and resulted in over 85% year-over-year revenue growth . There is now additional Brazil and South America exposure through Locaweb Servicos de Internet S.A. based in Sao Paulo. Offering Internet related services including cloud computing, it has also seen a surge in adoption and usage growing its revenue 23% YoY .