Emerging Markets and India Internet ETF Report | March 2024

Emerging Markets ETF & India Internet ETF Key Takeaways:

The leading positive contributors to the EMQQ index performance were Meituan and Brazil-based Nubank, posting gains of 27.4% and 28.7%, respectively. The former got a boost after management stated plans to cut its loss-making group-buying business. The core business remains profitable. Meanwhile, Nubank benefited from a strong set of quarterly results, as discussed below.

The two largest detractors for the month were Mercadolibre and India’s Bajaj Finance, falling -6.8% and -5.2%, respectively. The former was negatively impacted by a one-off tax hit in its most recent quarterly results. Despite that, the company still managed to increase sales by 42% on an FX-neutral basis as the company continues to take market share in Latin America’s burgeoning e-commerce and fintech markets.

Emerging Markets Tech News

China India Economy Beats Expectations with 8.4% Growth

India has maintained its position as the world’s fastest-growing major economy, with a notable 8.4% expansion in the last quarter of 2023 compared to the same period in the previous year. Prime Minister Narendra Modi recently emphasized the strength and potential of the Indian economy. The country is poised to surpass Japan and Germany to become the world’s third-largest economy in the coming years. The robust growth, surpassing expectations, was driven by a strong performance in the manufacturing sector, which expanded by 11.6%. Additionally, private consumption increased by 3.5%, constituting a significant portion of India’s GDP.

Strong Quarter for Nubank

Brazilian fintech Nubank recently reported strong quarterly reports, with sales growth of 57% on an FX-neutral basis and a net income of $360.9 million, marking a nearly sixfold increase from the previous year. The company, backed by Warren Buffett, has attracted almost 20 million new clients in the past 12 months, positioning itself for further growth. Nubank’s CEO, David Vélez, outlined three strategic pillars, including accelerating secured lending in Brazil, expanding opportunities in the highest-income segment, and strengthening its presence in Mexico and Colombia.

The introduction of payroll loans in Brazil has contributed to the company’s robust performance, with the total loan portfolio reaching $18.2 billion by the end of 2023, a notable increase from the previous year. The company remains focused on transforming its growing customer base into profit and aims to surpass 100 million customers in 2024.

India’s Reliance Industries & Disney Deal Creates a Streaming Powerhouse

Reliance Industries and Walt Disney have announced the merger of their India streaming media assets, forming an $8 billion entertainment powerhouse in India. Reliance, led by Mukesh Ambani, will inject $1.4 billion into the merged entity, holding a majority stake of over 63%, while Disney will own the remaining share. The merged entity will have over 750M viewers across India and will also cater to the Indian diaspora globally, the companies said. The combined entity will likely capture 50% of the streaming market in India.

Alibaba Ramps Up Buybacks to $35 Billion

Alibaba has approved a $25 billion expansion to its share repurchase program, extending it until March 2027. This move increases the total available for buybacks to $35.3 billion over the next three fiscal years. Alibaba’s Chief Financial Officer, Toby Xu, emphasized that this decision reflects the company’s confidence in its business outlook and cash flow. This comes after the company also announced Alibaba would spend $2.5 billion for its first annual dividend. Both measures point to an increasing focus on capital efficiency and boosting shareholder returns.

Growing Global Reach of India’s Unified Payment Interface

The internationalization of India’s Unified Payments Interface, the country’s payments platform, has commenced, allowing Indians to use the platform for transactions in seven countries, including purchasing Eiffel Tower tickets. Transactions are possible at nearly three million merchants in these nations, and remittances from the UAE and Singapore, accounting for a quarter of the $125 billion remitted to India in 2023, can now be facilitated.

While the initial numbers are small compared to local QR code transactions, experts foresee potential growth, similar to UPI’s domestic trajectory, which saw transactions rise from 920 million in 2017-18 to 84 billion in 2022-23. The ambitious target is to achieve one billion transactions per day by 2026-27.

Source of all performance data: HANetf / Bloomberg. Data as of 29.02.2024. Please note that all performance figures are showing net data. Past performance is not indicative of future performance and when you invest in ETFs your capital is at risk.

Emerging Markets ETF Performance
As of 29.02.2024

 1M3M6MYTD12M3YSI
EMQQ Emerging Markets Internet & Ecommerce UCITS ETF5.87%-1.87%-1.07%-1.26%1.50%-56.43%-1.33%
EMQQ Emerging Markets Internet & Ecommerce Index5.96%-1.49%-0.49%-1.04%2.53%-55.10%4.79%

India Internet ETF Performance
As of 29.02.2024

 1M3M6MYTD12M3YSI
INQQ India Internet Emerging Markets & Ecommerce ESG-S UCITS ETF0.52%8.53%N/A2.43%N/AN/A10.44%
INQQ The India Internet & Ecommerce ESG Screened Index0.92%10.14%14.65%3.16%45.32%N/A12.14%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 29/02/2024

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. 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. Please remember that when you invest in ETFs and ETCs your capital is at risk.

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