Governmental regulation in India, as in the case of most emerging markets (EM) countries, has been a primary roadblock when it comes to foreign business investment. However, more government initiatives, particularly in the internet of things and ecommerce, can spur more opportunities for investors to get in on the action in EM.
“The Indian government is pursuing strategies and initiatives designed to support the digital economy and, consequently, may help to bolster ecommerce in the country,” EMQQ noted in an email.
EMQQ highlighted three initiatives that Prime Minister Narendra Modi stressed when the Digital India strategy was launched in 2015:
- Infrastructure: The Digital India initiative aims to provide high-speed internet service to all of its citizens.
- Government and services: The initiative aims to make all government services accessible online to all of its citizens with transactions made simple through an electronic medium.
- Digital empowerment of citizens: This aspect of the initiative looks to provide digital literacy and to make digital resources easily accessible.
To take advantage of this growth, investors can look at the Emerging Market Internet & Ecommerce ETF (NYSEArca: EMQQ)–the first ETF to focus on the universe of internet and ecommerce innovators in some of the fastest-growing markets in the world, marked the close of a strong year of performance in 2019. Through December 26, the Fund returned 33.42% YTD (Fund Nav) and a true bright spot in a volatile global market.
Coming off a significant drawdown in 2018 that coincided with the announcement and escalation of tariffs between the U.S. and China, the fund has managed to rebound in 2019 despite volatility from trade war news. To close out 2019, markets benefitted off a “phase one” trade deal that spurred a stock market rally ahead of Christmas.
EMQQ provides investors with exposure to the internet and ecommerce sectors of the developing world. Many investors believe that the growth of consumption in emerging markets represents a significant growth opportunity as more than one billion people are expected to enter the consumer class in the coming decades. Increasingly, these consumers are using smartphones and broadband mobile connections to access the internet.
EMQQ holds over 40 companies operating in Emerging and Frontier Markets including China, India, Brazil, Russia, South Korea, Taiwan, South Africa, Mexico, Argentina, Malaysia, Thailand, Indonesia, Vietnam, Philippines, Turkey, Czech Republic, Poland and Colombia. Its top 10 holdings includes exposure to global powerhouses like Alibaba and Tencent Holdings.
Investors looking broad-based exposure to India can use the iShares MSCI India ETF (CBOE: INDA). INDA seeks to track the investment results of the MSCI India Index composed of Indian equities, which measures the performance of equity securities of companies whose market capitalization, as calculated by the index provider, represents the top 85% of companies in the Indian securities market.
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