Investors looking for emerging markets ETFs to consider buying on the coronavirus-induced dip may want to mull consumer-related fare such as the Emerging Market Internet & Ecommerce ETF (NYSEArca: EMQQ).
EMQQ, the first ETF to focus on the universe of internet and eCommerce innovators in some of the fastest-growing markets in the world, 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.
Data confirm there is a buoyant long-term thesis for EMQQ.
“According to research from McKinsey & Company, half of the world increase in consumption between 2013 and 2025 is expected to come from emerging markets. Investing in the internet and e-commerce sectors is the best way to capture the rising importance of emerging market consumers,” according to Seeking Alpha.
Evaluating EMQQ
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 primarily focuses on the internet and e-commerce sectors of the developing world, helping investors capitalize on the growth of consumption in emerging markets, which represents a significant growth opportunity as more than a billion people are expected to enter the consumer class in the coming decades.
Importantly, EMQQ skirts some well-known emerging markets risks, such heavy financial services exposure, commodities exposure and more.
“Since EMQQ is entirely focused on internet businesses, it avoids direct exposure to common emerging market risks,” notes Seeking Alpha. “It has no direct exposure to commodities. Similarly, it has no exposure to banks or financial services, other than the e-payment platforms of tech companies such as Alibaba and Tencent. Consequently, EMQQ avoids the risks caused by the buildup in bad loans on the balance sheets of Chinese banks.”
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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.