The U.S. is the world’s largest e-commerce/online retail market, and thanks to the likes of Amazon (NASDAQ: AMZN), it is one of the most desirable investment destinations for the next generation of consumer spending habits.
However, emerging markets have something to say in the matter, indicating that there could be long-term opportunity with exchange traded funds such as the KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ). KEMQ follows the Solactive Emerging Markets Consumer Technology Index, which while China-heavy, provides exposures to a variety of developing economies.
That diversity is relevant because e-commerce is very much a global business, and it’s to the benefit of investors to acknowledge as much.
“We believe that e-commerce will continue to benefit from secular growth tailwinds and see global e-commerce sales of $3.4 trillion (2022E) growing at a [compounded annual growth rate] of 9% through 2026E to reach $4.8 trillion,” according to Goldman Sachs.
In the recent edition of the bank’s “2023 Global E-commerce Handbook,” Goldman highlighted several equity ideas among e-commerce and online retail names. While domestic stocks Amazon and eBay (NASDAQ: EBAY) made the list, Goldman also highlighted several emerging markets e-commerce stocks, including some marquee members of the KEMQ roster.
Those include Alibaba (NYSE: BABA), which is KEMQ’s second-largest holding. Alibaba is also on Goldman’s global conviction list, and the bank’s $136 price target on the Chinese company implies significant upside from current levels. Broadly speaking, the bank is bullish on China’s e-commerce market.
“Goldman also said China was the world’s largest e-commerce market, with an estimated $1.5 trillion in e-commerce sales in 2022, or about 43% of total sales globally,” reported Zavier Ong for CNBC. “The e-commerce market grew in 2020 as consumers stayed home during pandemic lockdowns. Goldman estimates that global e-commerce penetration jumped by about 6 percentage points in 2020, double the growth rate of the pre-pandemic era.”
Among other Chinese e-commerce names, Goldman is also constructive on JD.com (NASDAQ: JD) and Pinduoduo (PDD), which combine for about 5.4% of KEMQ’s portfolio.
As noted above, there are attractive opportunities in ex-China emerging markets e-commerce. Those include Singapore’s Sea (SE) and South Korean e-commerce firm Coupang (CPNG), both of which are top-10 holdings in KEMQ.
Coupang “is South Korea’s largest online retailer and has a presence in several key markets in Asia, although the firm announced in March that it had shuttered its operations in Japan. The exit came less than two years after it entered the market,” according to CNBC.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.