Disruptive forces are not relegated to developed markets, but they’re also permeating emerging markets (EM) as well. This gives funds like the Emerging Markets Internet & Ecommerce ETF (NYSEArca: EMQQ) a chance to capitalize on profitable opportunities in companies like Prosus.
“South African internet company Naspers (NAPRF) spun-off a 24% stake in its non-South African holdings on 9/11/19 in a new company named Prosus (PROSY),” according to the fund. “The offering, prior to trading, was valued at $105 billion, according to Reuters. Based on its 9/20/19 price, PROSY has a market cap of around $125 billion.”
Prosus holds interests in movers and shakers, such as Tencent Holdings. Tencent is an internet-based technology and cultural enterprise headquartered in Shenzhen, China, and as the second largest economy looks to bolster its technology sector, interest in companies like Tencent have the profit potential that could be exponential.
“PROSY holds a 31% stake in Chinese internet giant Tencent Holdings (TCEHY) which was worth around $125 billion, as of 9/30/19,” EMQQ added. “In addition, PROSY holds ownership stakes in a variety of companies in the payments, fintech, classified, food delivery, social and internet platform space. Thus, investors holding PROSY are basically getting a portfolio of companies for the price of PROSY’s Tencent stake.”
As explained by the EMQQ fund, Prosus “seeks to invest in companies with the potential to disrupt the industries in which they operate and build them into profitable operations. PROSY sees companies in emerging markets as holding the biggest opportunities, particularly China and India.”
EMQQ tracks an index of leading Internet and eCommerce companies serving Emerging Markets. It seeks to offer investors exposure to the growth of online consumption in the developing world. EMQQ holdings operate in diverse markets such as India, China, Brazil, Turkey, Nigeria, and Indonesia, to name a few. To be included, the companies must derive their profits from Ecommerce or Internet activities and include search engines, online retail, social networking, online video, e-payments, online gaming, and online travel.
EMQQ’s top 10 holdings as of 10/14/19:
- Pinduoduo Inc-Adr: 8.49%
- Alibaba Grp-Adr: 7.95%
- Tencent Holdings-Ltd: 7.19%
- Mercadolibre Inc: 5.76%
- Naver Corp: 5.75%
- Netease Inc-Adr: 5.74%
- Jd.Com Inc-Adr: 5.47%
- Baidu Inc – Spon Adr: 5.19%
- Naspers Ltd-N-Shs: 4.19%
- Ctrip.Com-Adr: 3.65%
EMQQ is the first ETF to focus on the universe of internet and ecommerce innovators in some of the fastest-growing markets in the world. Per Yahoo Finance performance numbers, EMQQ is up over 21%.
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