Do The Didi With This ETF

On the surface, the deal will not mean much to most U.S. investors because it involves a private company and a Chinese firm, but Uber's Chinese business is merging with Didi Chuxing, often referred to as the Uber of China, in a deal valued at $35 billion.

“The new entity combines Didi's most recent valuation of $28 billion and Uber China's $7 billion valuation for the $35 billion market capitalisation,” reported Reuters.

Why Didi/Uber Deserves Attention

The news agency reported that the Didi/Uber China deal could be made official as soon as Monday, with Uber China investors taking a 20 percent interest in the combined company. As technology and Internet businesses have evolved in developing economies, a spate of companies have come along (and gone) that are frequently compared to U.S. behemoths such as Amazon.com, Inc. AMZN and Google parent Alphabet Inc GOOG GOOGL.

Like their U.S. counterparts, emerging markets Internet companies often take stakes in up-and-coming firms like Didi, and there is an avenue for accessing that trend with exchange-traded funds: The Emerging Markets Internet and Ecommerce ETF EMQQ.

Related Link: An ETF For Cost-Conscious Dividend Investors

Exposure Through EMQQ

EMQQ's components “must derive their profits from e-commerce or Internet activities and include search engines, online retail, social networking, online video, e-payments, online gaming and online travel,” according to the issuer.

As a play on the Didi Chuxing/Uber China, EMQQ is particularly relevant because of its significant exposure to big-name Chinese Internet companies that are investors in Didi Chuxing.

“Didi itself was created last year from the merger of two companies backed separately by e-commerce giant Alibaba Group Holding Ltd BABA and social network firm Tencent Holdings Ltd TCEHY,” according to Reuters.

Tencent and Alibaba are EMQQ's two largest holdings, combining for nearly 17 percent of the ETF's weight. However, EMQQ's exposure to the emerging markets equivalents of companies like Amazon and Google is not limited to Alibaba and Tencent. Within EMQQ's top 10 holdings, at least three others beyond Alibaba and Tencent can be considered an Amazon or Google or China. Obviously, that trio does not include Yandex NV YNDX, the Google of Russia.

EMQQ's underlying index, the EMQQ Index, “provides diversified exposure to the Internet and Ecommerce sectors of Emerging and Frontier markets in Asia, Latin America, Africa, the Middle East and Eastern Europe. The index covers over 40 companies operating in Emerging and Frontier Markets including China, India, Brazil, Russia, South Korea, Taiwan, South Africa, Mexico, Argentina, Malaysia, Thailand, Indonesia, Vietnam, Philippines, Turkey, Czech Republic, Poland and Colombia,” according to EMQQ's issuer.

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