Dear Kyle, Welcome to the EMQQ Global news roundup for this week.
China cuts two key interest rates The People's Bank of China recently cut the rate on seven-day reverse repurchase operations, which went from 2.0% to 1.9%, and rates on its standing lending facility, these ones by a 10th of a percentage point. The moves mean that other key interest rates are likely to head lower soon, foreshadowing further steps to nudge China’s economy back on track. (READ MORE)(EMQQ INDEX)
India’s Prime Minister Narendra Modi is on a landmark visit to the U.S. On his first state visit to the U.S., Modi will meet President Joe Biden this Thursday. High on the agenda will be deepening of defense ties, India’s role in the Indo-Pacific, and partnerships in technology, especially in terms of companies open to set up operations in India. Modi is also expected to meet tech CEOs like Apple’s Tim Cook and Google’s Sundar Pichai. (READ MORE) (INQQ INDEX)
Brazil’s Nubank reaches the milestone of 80 million customers in Latin America 2023's first quarter represented significant progress for two of the companies markets, Mexico and Colombia. As they diversify their product portfolio, they both registered more than 3.8 million customers together —a 66% increase in one year. Nubank also saw a 130% YoY growth of its number of investor customers in Brazil. (READ MORE)(FMQQ INDEX)
EMQQ Global 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 last week. Please see below for a broad summary of the changes:
EMQQ Index
The EMQQ Index decreased to 116 constituents, adding four companies, and dropping thirteen due to Index rules on market capitalization, liquidity and trading volume.
Of the four new additions, three originated from India.
The largest new addition was Bajaj Finance Ltd, a traditional Indian lender that has fully digitized its operations and is on course to becoming a leading fintech super app.
India’s weight in the Index continues to rise, from roughly 10% in the December 2022 rebalance to 14% in the most recent June 2023 rebalance. India now has the second largest country weighting in the Index behind China.
FMQQ Index
The FMQQ Index decreased to 63 constituents, adding three companies, and dropping ten due to Index rules on market capitalization, liquidity and trading volume.
All new additions to the Index hailed from India.
The largest new addition was Bajaj Finance Ltd, as discussed above.
India has now become the largest country allocation in the FMQQ Index with a weighting just above 28%. It is followed by South Korea and Brazil.
INQQ Index
The INQQ Index increased to 25 constituents, adding three companies, and dropping two due to Index rules on market capitalization, liquidity and trading volume.
The two largest additions were Bajaj Finance Ltd (discussed above) and Freshworks Inc, a leading SaaS provider.
The INQQ Index continues to gradually grow as the Indian internet and ecommerce market matures from its infancy.
Source: EMQQ Research
India's market is a huge but complicated opportunity for Apple Apple has only captured a little over 4% of the smartphone market in India so far. In the country, which has 1.2 billion mobile phone users, brands like Samsung, Vivo and Xiaomi dominate. However, the appetite for Apple is increasing —although not necessarily how the brand would expect.
Last year, 11% of the secondhand smartphones sold in India were iPhones, up from 3% in 2021. It's become the fastest-growing refurbished brand in the country despite Apple's used iPhones have faced distribution problems in India since 2012. The government has mostly blocked imports over concerns about e-waste and domestic production.
India is still a poor country and a combination of factors make the iPhone a particularly expensive phone there. It can cost over 70,000 rupees (roughly $850) in a country where the average monthly salary is less than half of that. Although the company has recently opened its first two Apple stores that are setting sales records, its ability to sell phones in India is its biggest challenge.
The fact that third party resellers, and not Apple, are banking in on the secondhand smartphone appetite is clearly a sign that the company — which is in increasingly good terms with the Indian government as it's also recently opened a manufacturing facility there— could make its case to push for the secondhand market rather than keep opening more new stores. Sources: Rest of World
Akeem Bailey is the Director of Research at EMQQ Global. Akeem joined EMQQ Global in 2021. Akeem leads the firm's research efforts and actively works with investors on a wide range of subjects from portfolio analytics and valuation to helping articulate the long term growth opportunity in the Emerging Markets tech landscape. Prior experience includes over six years working in emerging market equities as an investment professional as well as multiple years serving as a strategy consultant in India. His career is deeply rooted in the emerging markets, both on the ground and as an investor.
