Emerging market outlooks range from optimism to cautious warnings of constrained growth in the face of a strengthening U.S. dollar. For investors looking to EM investing next year, consumer technologies could provide an avenue of opportunity. The KraneShares Emerging Markets Consumer Technology Index ETF (KEMQ) offers contrarian prospects for investors in 2025.
Many consumer technology giants are found in China, a country most foreign investors remain underweight to. Given China’s increasing commitment to actively supporting consumer and economic growth next year, consumer tech companies could benefit from policy support tailwinds in 2025. Such active support might prove a boon should the U.S. dollar strengthen next year.
KEMQ could prove beneficial to investors with an underweight to China. While capturing opportunity in the country, the strategy diversifies its exposure across EM countries. Beyond China, top countries by weight in the fund include South Korea, Taiwan, and India as of 11/30/24.
The fund targets consumer technology within emerging markets by seeking to track the Solactive Emerging Markets Consumer Technology Index. It offers exposure to Google, PayPal, Amazon, and other equivalents within emerging markets.
KEMQ an EM Fund of Interest Heading Into 2025
KEMQ currently trends above its 200-day simple moving average but currently trades slightly below its 50-day SMA. The sharp spike in China’s markets in October, a result of policy shifts from the government, caused trend adjustments in the fund’s 50-day SMA.
From a technical standpoint, KEMQ is a fund of interest heading into the new year. While the market settles into its seemingly new, elevated trading range, the fund has the potential to cross above its 50-day SMA once more. For trend followers, funds trading above their SMAs send strong buy signals. KEMQ is also up 17.78% YTD on a total returns basis, according to Y-Charts data.
KEMQ focuses on internet retail and e-commerce growth in 26 emerging market countries, including China. The fund’s structure ensures diversification because of its limitation on country inclusion. One country only accounts for 40% of the fund, with a maximum holding weight of 3% at rebalance.
KEMQ has an expense ratio of 0.50% with a fee waiver that expires on August 1, 2025.
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