EMQQ Global Performance Overview
- The EMQQ Index rose 4.8% in February. YTD, it is up 9.1%
- The FMQQ Index improved 2.3% for the month. YTD, it is down 0.8%.
- The INQQ Index declined 7.4% in February. YTD, it is down 15.4%.
The leading positive contributors to the performance of the EMQQ Index in February came from China’s two largest internet companies: Alibaba and Tencent. Both rose 44.7% and 19.5%, respectively. Both companies have made major inroads in AI in recent months with the release of their own LLM models that have proven competitive with global peers, helping spark renewed interest in the Chinese internet space at a time when valuations still remain far below their US peers.
The two largest detractors for the month were Brazil’s Nubank and China’s Trip.com Group, the country’s leading travel tech company. The former declined 18.8%, while the latter fell 20.2%. Both fell on softer-than-expected earnings, although growth remains robust for each company. In its most recent quarter, Nubank sales jumped 25%, while Trip.com saw revenues improve 23% year over year. The growth outlook for both companies remains strong.
Sources: Bloomberg, Company financials
Emerging Markets Tech News to Know
At a Glance:
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Alibaba Earnings Get a Boost From AI
- Mercadolibre Growth Surges (Again)
- Howard Marks Optimistic on India for the Next Decade
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Chart of the Month
Alibaba Earnings Get a Boost From AI
Alibaba recently announced a solid set of earnings with accelerated growth across all its core segments. Perhaps more importantly, the company announced a bold push into artificial intelligence, committing to invest more in AI and cloud infrastructure over the next three years than in the past decade. CEO Eddie Wu emphasized the company's ambition to develop artificial general intelligence (AGI) and enhance deep reasoning models, aiming to compete with global AI leaders.
The company significantly increased capital expenditure in 2024 to fuel advancements in AI, including acquiring high-performance processors for training large language models. Alibaba's cloud business saw strong growth, rising 13% year-over-year, driven by increasing demand for AI-powered services.
Beyond internal investments, Alibaba has been actively supporting Chinese AI startups, fostering innovation and strengthening its technological edge. The company’s open-source AI initiatives are also drawing developers to its ecosystem, reinforcing its cloud leadership. With a clear focus on AI-driven transformation, Alibaba is positioning itself at the forefront of the next wave of intelligent computing, ensuring long-term growth and competitiveness in the global tech landscape.
Mercadolibre Growth Surges (Again)
MercadoLibre, Latin America's leading e-commerce and fintech platform, reported strong fourth-quarter 2024 results, showcasing robust growth across key financial metrics. The company achieved net revenues of $6.1 billion, marking a 37% year-over-year increase and a net income of $639 million, reflecting a robust 287% surge compared to the same period last year. The results were driven by an 8% increase in gross merchandise volume and a 33% rise in total payment volume within its fintech operations. Notably, MercadoLibre's user base expanded substantially, reaching over 100 million annual unique buyers and 60 million fintech monthly active users for the first time. The results underscore MercadoLibre's dominant position in the Latin American market and its effective strategies in both the e-commerce and financial services sectors.
Howard Marks Optimistic on India for the Next Decade
Howard Marks, co-chairman of Oaktree Capital Management, has expressed optimism about India's economic prospects over the next decade. He highlights the nation's large population and favorable demographics as key drivers of growth. Marks acknowledges India's significant progress in infrastructure development but emphasizes that sustained advancement will depend on effective leadership and governance. He notes, "India is making great strides on infrastructure, and a lot will always depend on leadership." Reflecting on past opportunities, Marks advises against delaying investments in India, stating, "You don't want to miss out on India in the next 10 years."
Chart of the Month
Quick Commerce has very quickly established itself as a major disruptive force in India. Quick Commerce, defined loosely as “10-minute delivery of anything you want,” is threatening not just the leaders in “traditional” ecommerce companies like Flipkart and Amazon but also the 13 million “mom and pop” Kirana stores that account for 90% of India’s grocery retail market. Quick Commerce has a huge upside that we believe provides significant long-term opportunities for value creation in the sector led by publicly traded Blinkit and Swiggy, both constituents of the India Internet Index (ticker: INQQ). To dig deeper please refer to our recent report on the subject.
