EMQQ Global Performance Overview
The leading positive contributors to the EMQQ Index performance in September were China’s Meituan and Alibaba, posting gains of 46.2% and 35.6%, respectively. Both companies, as well as the broader Chinese internet space, rose after Chinese regulators announced a new stimulus package that exceeded expectations, which we discuss further below.
The two largest detractors for the month were Brazil’s Nubank and Kaspi, the leading fintech super app in Kazakhstan, falling 8.8% and 19.1%, respectively. The former cooled down after a strong start to the year. Kaspi pulled back despite a strong set of quarterly results in which sales surged 39%, while earnings per share improved 24%.1
At a Glance:
China Unleashes More Aggressive Stimulus
China Unleashes More Aggressive Stimulus
China's central bank recently launched its most extensive stimulus since 2008, aiming to reignite economic growth and bolster market confidence. Key measures include a reduction in the reserve requirement ratio (RRR) by 0.5%, releasing 1 trillion yuan ($140 billion) into the financial system, with potential for further cuts. Another $140 billion will be devoted to boosting consumption.
The People's Bank of China also lowered the seven-day reverse repo rate to 1.5%, while reducing mortgage rates for existing loans and cutting the minimum down payment for second homes. This package injects liquidity to support the property market and financial stability, addressing challenges like deflation and bolstering consumer demand. The move helped spark renewed interest and enthusiasm for Chinese equities, including those in the internet sector, whose valuations remain at multi-year lows.2
India’s Modi Meets Big U.S. Tech
During his three-day visit to the U.S., Indian Prime Minister Narendra Modi held a roundtable with top tech leaders, including Google CEO Sundar Picha and NVIDIA’s Jensen Huang, to encourage collaboration and investment in India’s growing technology and internet sectors. Discussions covered AI, quantum computing, biotechnology, life sciences, semiconductors, and IT. Modi emphasized India’s strides in technology and its potential as a global hub for semiconductor manufacturing. CEOs expressed strong interest in investing in Indian startups. Pichai praised Modi’s vision for AI-driven transformation in healthcare, education, and agriculture and noted Google's Pixel phone manufacturing in India. The enthusiasm is warranted as India’s internet sector is expected to surge six-fold to around $1 trillion by 2030.
World’s Top Banker Bets on India Growth for Next 30 Years
JPMorgan Chase CEO Jamie Dimon visited India in September and highlighted that the South Asian nation of 1.4 billion people is well on track to become a $7 trillion economy by 2030, driven by its advancements in digital and physical infrastructure under Prime Minister Narendra Modi’s leadership. Dimon praised the country’s progress since his first visit in 2005, noting key reforms like Aadhaar, banking access, and GST, which are attracting multinational investments. He also highlighted India’s demographic advantage, with a young workforce poised to benefit as Western nations age. These factors, coupled with strong leadership and regulatory improvements, position India for substantial economic growth.
Mercadolibre Expands Further into Mexico and Fintech
Latin American e-commerce giant MercadoLibre's fintech arm, Mercado Pago, has submitted its request for a banking license in Mexico, allowing it to expand services beyond digital payments. With the license, the company aims to offer savings and checking accounts, commercial loans, mortgages, and more. Mercado Pago’s current offerings include credit/debit cards, international transfers, and personal loans. Pedro Rivas and Osvaldo Giménez, company executives, aim to position Mercado Pago as the largest digital bank in Mexico. The move solidifies Mercadolibre’s ability to expand its services beyond its e-commerce business to a series of other digital franchises across Latam. These moves have helped the company eclipse Petrobras to become the largest company by market cap in Latin America this year.
Valuation Snapshot
Despite a recent surge in Chinese internet equities, valuations remain low. In fact, the market capitalizations of all the Chinese tech firms in the EMQQ Index are still lower than several individual FAANG stocks.2
Sources:
1 Bloomberg, Company financials
2 Bloomberg