JThe EMQQ index, which EMQQ Global Emerging Markets Internet & E-Commerce ETF (NYSE Arca: EMQQ) tracks, grew to 135 constituents as part of its latest rebalancing, adding 19 companies and dropping 14.
While the biggest addition was Chinese internet company Kanzhun Ltd., most new additions came from outside of China, with around 90% of new entrants coming from markets such as Brazil, India, Indonesia and South Korea. Of the 19 new additions, 10 were from companies originating from India. Prominent among these companies are PB Fintech, online energy brokerage Energy Exchange, and online caller ID app Truecaller AB.
“India was again the main highlight of this latest rebalancing. More than half of the new additions originated there,” said Kevin T. Carter, Founder and CIO of EMQQ Global. trend will continue over time.”
Carter added that India’s internet opportunity “reflects China 10 years ago and the United States more than two decades ago.”
Founded in 2014, Kanzhun is China’s leading online recruitment platform. It connects job seekers and companies via a mobile application. US-based investors might be more comfortable thinking of it as China’s Indeed.com. The company has over 100 million users.
Despite most of the additions coming from India or elsewhere outside of China, Carter noted that “China nevertheless remains an important part of the index, with a weighting north of 60%.”
“While companies in the Chinese tech space have undergone major regulatory adjustment over the past year, most of the heavy-handed reforms appear to be behind us,” Carter said. “Meanwhile, regulatory pressures appear to be easing. As we have always said, technology regulation is not and will not be unique to China.
The second largest addition to the index was Bank Jago Tbk, an Indonesia-based digital bank. Like Nubank in Brazil (the world’s largest digital bank and another member of the EMQQ index), Bank Jago offers savings accounts, loans and money transfers through digital/mobile channels. In 2020, Indonesian technology company GoTo Group (another EMQQ Global company) became a major shareholder of the company
The third largest company added during the rebalancing was PB Fintech, India’s largest online platform for insurance and loan products. Founded in 2008, the online financial services platform has become a go-to app for comparing policies and connecting users to third-party insurance and loan offers.
To be included in the index, more than half of a company’s profits must come from e-commerce or internet businesses, but they need not be listed locally.
By focusing on the Internet and e-commerce in emerging markets, EMQQ seeks to capture the growth and innovation occurring in some of the largest and fastest growing populations in the world.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.