E-commerce is booming in this region – Play with EMQQ
As the thesis of investing in e-commerce has grown in recent years, investors have quickly learned that online shopping is not a quintessential American theme, and that Amazon (NASDAQ: AMZN) is not. not the only way to participate in this segment.
China and companies like Alibaba (NYSE: BABA) have opened the eyes of U.S. investors to the emerging market e-commerce investment thesis. Some other markets do the same, highlighting good exchange-traded funds, namely the Emerging Markets Internet Ecommerce ETFs (EMQQ), In the process.
Speaking of Alibaba, which is EMQQ’s second-largest holding at 8.19% weight, it looks to leverage Lazada, its Southeast Asia unit, in significant ways.
“China’s e-commerce leader has a long-term goal of quintuple the gross value of goods, the sum of transactions on Lazada’s platforms, to $ 100 billion,” Alibaba said in a presentation to investors. He wants Lazada to eventually serve more than 300 million users, according to a slideshow posted on his website, ”Bloomberg reports.
Lazada operates in six countries: Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. Singapore accounts for nearly 3% of EMQQ’s geographic exposure, but the real story is the potential these markets offer.
Other EMQQ holdings, including Tencent Holdings and Sea Group, are taking note. These are respectively the largest and eighth largest positions in EMQQ, representing more than 13% of the fund’s weighting. Spurred on by regulatory headwinds in China, companies like Alibaba and Tencent are looking to new markets to expand their presence in online retail, and there is plenty of room for growth.
“Singapore-based Lazada has increased its GMV to around $ 21 billion in the past 12 months, after increasing its active consumer base 1.8-fold to 130 million from March 2020 through September. It is far behind its main rival in the region, Shopee of Sea Ltd., which operates in Southeast Asia and Taiwan and reported more than $ 56 billion in transactions in the four quarters through the end of September. According to Bloomberg.
Although Sea Group has a clear lead in e-commerce in Southeast Asia, this is an advantage for EMQQ as, as noted above, it is one of the top 10 holdings of the fund and is also supported by Tencent.
Beyond that, Southeast Asia offers companies like Alibaba and Tencent ways to offset potential demographic vulnerabilities in China. While China is a massive economy with a broad avenue for online retail growth, it is also home to an aging population. Conversely, demographic trends in countries like the Philippines, Thailand and Vietnam are more favorable.
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