Ant Group’s record breaking IPO was blocked by the Chinese government, just two days before its debut on the Shanghai and Hong Kong stock exchange. In response, Alibaba stock falls as uncertainly sinks in.
Before the November 3rd announcement, Jack Ma’s Ant Group was poised to be the largest initial public offering of all time, coming in at a whopping $310 billion valuation.
The fintech powerhouse, got its start as the payments platform powering Alibaba, but was split off into its own entity in 2011. Today, the Ant Group portfolio includes it flagship brand Alipay, the world’s largest mobile and online payments platform, amongst other companies facilitating cloud-based banking, virtual credit cards, loans, and wealth management. The delayed IPO has triggered somewhat of a frenzy for investors, as many scramble to understand the implications surrounding the move by the Chinese government, and what it means for Chinese listed companies going forward. Most U.S. investors, who cannot easily access the IPO on the Shanghai and Hong Kong stock exchange, will likely have to wait until Ant’s shares are incorporated into various China / emerging markets focused ETFs.
Kevin Carter, Founder & CIO, EMQQ The Emerging Markets Internet & Ecommerce ETF says that he was, “initially worried that the IPO may break the Chinese Stock Market.” Carter goes on to cite “an already heated Shanghai Stock Exchange, the massive demand for Ant Group shares, and the incredible margin loans being provided,” as key factors for concern.
EMQQ, launched the same year as Alibaba’s IPO in 2014, provides investors with diversified exposure to companies operating in emerging and frontier markets. Capitalizing on the rapidly increasing consumption in countries like China, India and Brazil, the ETF zeroes in on internet and ecommerce sectors in the developing world.
Top holdings include Alibaba (BABA) and Tencent (TCEHY). According to ETFdb, EMQQ is the #1 ranked emerging markets ETF for the 1 year, 3 year, and 5 year time periods. With the internet becoming increasingly affordable and accessible, billions of people in the developing world are now leapfrogging traditional consumption patterns and starting to consume online for the first time. This trend, combined with the global pandemic forcing more digitized lifestyles, has resulted in an inflection point that’s accelerated ecommerce use globally.The emergence of an enormous middle class consumer base, increased access to computers and the internet are keys to the growth story in emerging markets.
“While I have had access to a computer for over 30 years, there are still billions of people across the developing world that have never had access to a computer,” says Carter.
As a result of the digitalization of more parts of life, many companies in underdeveloped countries can go into verticals that US counterparts cannot reach. For example, the rapid adoption of mobile payments has captured many emerging markets and, in comparison, the US is falling behind. Ant Group’s powerful payments platform entered the arena early, and continues to innovate and expand its offering, gaining massive market share of Chinese users.
EMQQ’s acute focus on consumer-driven internet and ecommerce companies has paid off. As of November 2020, EMQQ is up more than 50% year to date, where other more broad-based emerging markets funds have struggled in the face of the global pandemic and ensuing shutdowns.
To learn more, register for EMQQ’s webcast: Something BIG is Happening in Emerging Markets: The Ant Group IPO, The Delay and What it Means for Investors. What’s covered:
- IPO of Alibaba fintech subsidiary ANT Group – The largest IPO EVER!
- Why Facebook, Google, Amazon and Walmart are investing Billions into ecommerce in India
- How the largest Emerging Market ETFs are fundamentally flawed The rising middle-class consumer and What McKinsey & Co. calls, “the biggest growth opportunity in the history of capitalism”
- How internet giants like Alibaba, Tencent and MercadoLibre are leading the digital revolution in Emerging Markets