EMQQ Global Performance Overview
- The EMQQ Index declined 0.56% in June. YTD is up 8.26%.
- The FMQQ Index improved by 2.63% in June. YTD is up 10.36%.
- The INQQ Index jumped 9.46% in June. YTD is up 13.46%.
The leading positive contributors to the EMQQ Index's performance in June were India-based Reliance Industries and China’s Meituan, posting gains of 9.55% and 5.90%, respectively. Reliance rose on news that management is expediting plans to IPO more parts of its burgeoning internet/ tech ecosystem. Meanwhile, Meituan got a boost from improving growth in China’s quick delivery and online travel industries, both key parts of its business.
The two largest detractors for the month were Pinduoduo and Mercadolibre, falling 11.24% and 4.76%, respectively. Regardless of the pullback, both companies are coming off strong first quarters where revenues and earnings surged. In Q1 2024, Mercadolibre saw sales rise 36%, while Pinduoduo clocked an even more impressive 131% jump in revenues, according to Bloomberg.
Emerging Markets Tech News to Know
At a Glance:
- Alibaba Accelerates Share Buybacks
- India Steadily Moving Toward 8% Annual Growth
- Brazil & India Lead the World in Instant Payments Growth
- India Set to Become World’s Third Largest Consumer Market
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Fintech Pioneer Nubank Finds New Growth Driver in e-Insurance
Alibaba Accelerates Share Buybacks
Chinese companies are increasingly raising dividends and share buybacks in an attempt to bolster shareholder returns. Alibaba, China’s largest e-commerce firm, recently announced that it repurchased $5.8 billion of shares during the most recent quarter, resulting in a net reduction of 2.3% of the company’s shares outstanding. While this was the largest quarterly share repurchase over the last 3 years, the company still has over $26 billion earmarked for stock buybacks in the future, a number that represents roughly 15% of the company’s current market capitalization.
India Steadily Moving Toward 8% Annual Growth
India's economic growth is approaching a sustained 8%, marking a major structural shift in its growth trajectory. The Reserve Bank of India Governor Shaktikanta Das expressed confidence in this growth, highlighting the country's strong momentum and significant contribution to global growth, which was around 19% last year. The RBI's projections and now-casting models also indicate continued strong growth momentum. Meanwhile, recently-elected Prime Minister Narendra Modi still has ambitious goals of transforming India into a developed nation by 2047, representing a significant jump from where India is today.
Brazil & India Lead the World in Instant Payments Growth
Both Brazil and India are spearheading innovation globally in digital payments. Brazil introduced Pix in 2020 during the COVID-19 pandemic, while India had launched its Unified Payments Interface (UPI) earlier. These systems were part of broader digitalization efforts in both countries. Today, Brazil and India together account for over 60% of all real-time transactions globally. Brazil's Pix represents 15% of these instant payments, and India's UPI makes up 46%. Brazil's Pix has seen rapid growth, with nearly $400 billion in transactions monthly and over 150 million users. Pix is also set to introduce new features like offline payments, direct debits, and credit options.
India Set to Become World’s Third Largest Consumer Market
India’s consumer market is set to become the world’s third-largest by 2027 as the number of middle to high-income households rises, according to a recent report by BMI. The report forecasts that India's household spending per capita will grow at 7.8% annually, outpacing other developing Asian economies like Indonesia, the Philippines, and Thailand. By 2027, India’s household spending is estimated to exceed $3 trillion, driven by a 14.6% annual increase in disposable income. About 26% of Indian households are projected to have $10,000 in annual disposable income, with wealthier households mainly in urban economic centers such as New Delhi, Mumbai, and Bengaluru. India's large youth population, particularly the 33% aged between 20 and 33, will significantly boost consumer spending. Increasing urbanization will further enhance consumer spending by making it easier for companies to access consumers in large cities.
Fintech Pioneer Nubank Finds New Growth Driver in e-Insurance
Nubank, the world's largest digital banking platform outside of Asia, and Chubb, a global insurance leader, have reached 2 million active insurance policies in Brazil. Their success stems from Nubank Vida, the first co-created product launched in 2020. A fully digital insurance product, Nubank Vida, enables users to get quotes, file claims, make premium payments, and manage their accounts directly through the Nu app. The recent success and growth of the insurance unit reflects positively on Nubank’s ability to expand its fintech portfolio across Latin America, where penetration across several verticals is still very low.
Rebalance Summary
The three Indices under the EMQQ Global umbrella (EMQQ Index, FMQQ Index, and INQQ Index) recently completed their first of two semi-rebalances at the end of June. Please see below for a brief summary of the changes:
EMQQ: Emerging Markets Internet Index
- The EMQQ Index decreased to 66 constituents, dropping 46 companies as the adjusted free-float market capitalization threshold for inclusion in the Index rose from $300 to $1 billion.
- India’s weight in the Index continues to rise, from roughly 16% in the December 2023 rebalance to 18% in the most recent rebalance. This is up from just 1% several years ago. India is now the second largest country in the Index, behind China. Meanwhile, Brazil has the third largest allocation, around 15%.
- China remains the largest exposure in the Index at a 45% weighting.
- There were no new additions to the Index during this rebalance
FMQQ: Next Frontier Internet Index (ex-China)
- The FMQQ Index decreased to 36 constituents, dropping 30 companies as the adjusted free-float market capitalization threshold for inclusion in the Index rose from $300 to $1 billion.
- India remains the largest country allocation in the FMQQ Index, with a weighting just above 38%. Brazil has jumped to the second largest country allocation, with a weight of roughly 25%.
- There were no new additions to the Index during this rebalance.
INQQ Index
- The INQQ Index remained stable at 25 constituents.
- The INQQ Index continues to grow gradually as the Indian internet and e-commerce market matures from its infancy. Over the next year, we anticipate more Indian internet and tech companies entering the market.