Solactive China Internet Performance Index - China planning program worth billions for the Internet sector - equities are booming - Investerest
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Public
Solactive China Internet
Performance Index
China planning program worth billions for the Internet sector – equities are booming
Platform & Services Michael Haupt
Thematic Investments
August 2020Public
Chinese tech equities exceed
the Nasdaq 100 index in five-year period August 2020
MSCI China Information Technology Index in comparison with U.S. technology equities
310
260
Indexed performance from August 5, 2015
210
160
110
60
05.08.2015 05.08.2016 05.08.2017 05.08.2018 05.08.2019 05.08.2020
MSCI China Information Technology Index Nasdaq 100
Source: Bloomberg, August 5, 2020
Note: Past performance and simulations are not reliable indicators of future performance.
2Public
Fundamental reasons support performance August 2020
Countries with the highest sales in e-commerce (not including services) globally in 2019*
900’000 Online business is well established
and widely accepted in China
800’000 763’940.7
700’000 In absolute figures, China leads the
way in the sale of products that are
Sales in millions of EUR
600’000 ordered using the Internet
500’000
• China’s sales are more than twice as
400’000 high as in the U.S.
315’656
300’000
200’000
100’000 78’032.2 74’476.2 65’401
0
China USA Japan Vereinigtes Deutschland
Königreich
→ China has the highest online sales by some distance
3
Source: Statista, 2020.
* Forecast: These statistics show the predicted sales in e-commerce worldwide by country in the year 2019. The forecast was adjusted for the expected impact of COVID-19. The e-commerce
market encompasses sales of physical goods via a digital channel to private end users (B2C). Note: Former trends with respect to sales in the online retail industry are not a reliable indicator for 3
future developments.Public
Online sales in China: predicted to double in four years August 2020
Sales forecast for online trade in China up to 2023 (in billion USD)
4’500 Sales generated by products and
4’096 services ordered using the Internet
4’000 should continue to grow
3’471
3’500
The coronavirus crisis has given online
Sales in billions of US dollars
2’916 business an additional boost.
3’000
Shopping and leisure activities have
2’500 2’405 shifted further onto the Internet
1’935
2’000 Chinese economic stimulus
1’520 program to boost the economy
1’500 following the coronavirus lockdown
primarily targets new technology such
1’000
as 5G, AI, and data centers
500
0
2018 2019* 2020* 2021* 2022* 2023*
* Forecast
→ Government stimulus programs should give the sector additional momentum
3
Sources: Statista, eMarketer, June 2019. Online trade encompasses products and services that are ordered using the Internet via any device.
Note: Former trends with respect to sales in online trade are not a reliable indicator for future developments.
4Public
China’s economic stimulus program after coronavirus:
investments in technological infrastructure to have priority August 2020
USD 2 trillion* to set up next-generation IT infrastructure
Artificial intelligence (AI)
Establishment of 20 AI trial
zones by 2023
High-voltage network
Investments in the construction
of 16 high-voltage projects
5G
Construction of 5 to 5.5 million
5G base stations to achieve 5G
coverage throughout the country
Industry Internet
Construction of three to five
industry internet platforms by Data centers
2025 to enable digital Construction of large super data
transformation for millions of centers to cover domestic
companies demand for storage capacity
* Estimates
Source: Nikkei Asian Review dated June 1
5Public
The Solactive China Internet Performance Index features
ten securities from the largest Chinese Internet companies August 2020
Selection pool
Stock corporations with their headquarters in China and a listing in one of the following countries: Australia,
HEADQUARTERS Austria, Belgium, Canada, China, Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong,
AND LISTING Indonesia, Ireland, Italy, Japan, Malaysia, Netherlands, Norway, Portugal, Singapore, South Korea, Spain,
Sweden, Switzerland, Taiwan, United Kingdom, United States
• Market capitalization ≥ EUR 50 million
LIQUIDITY AND
• Sufficient trading amount: both within a calendar week and on each stock exchange trading day
SIZE CRITERIA
• Sufficient tradability for foreign investors
THEMATIC
• Main business activity in which the Internet plays a key role
CRITERIA
• The ten largest companies by market capitalization from the selection pool are chosen
SECURITIES
• Each index member receives the minimum weighting of 2 percent; the residual weighting is distributed in
SELECTION/
proportion to the market capitalization of the index members
WEIGHTING
• The index currency is the euro
• Ordinary adjustment takes place semi-annually, on the third Friday in June and December
• The index composition is reviewed prior to the adjustment date
REBALANCING • The weighting of the index members is increased to a minimum of 2 percent
• Extraordinary rebalancing: If an index member is removed due to extraordinary events between two
adjustment dates, the committee names a successor. The index is adjusted on the same day.
Source: Solactive. The Solactive China Internet Performance Index is an index calculated, published, and distributed by Solactive AG. To follow the index visit: www.solactive.com
6Public
Participate in Chinese Internet equities in one transaction
Solactive China Internet Performance Index August 2020
Composition of the index on July 31, 2020
Company Main area Currency Country Weighting as of 07/31/2020
Tencent Holdings Ltd Social media HKD China 16.39%
Alibaba Group Holding – SP ADR E-commerce USD China 16.08%
JD.com Inc E-commerce USD China 15.37%
Pinduoduo Inc E-commerce USD China 12.15%
NetEase Inc ADR Gaming USD China 11.71%
Baidu Inc – Spon ADR Search engine USD China 8.62%
Trip.com Group Ltd Online travel services USD China 6.66%
58.com Inc E-commerce USD China 5.13%
iQIYI Inc Video platform USD China 4.01%
JOYY Inc Social media USD China 3.87%
*Source: Solactive, as of July 31, 2020. The Solactive China Internet Performance Index is an index calculated, published, and distributed by Solactive AG.
Index guide and current composition downloadable at: www.solactive.com
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Index composition as of July 31, 2020 August 2020
Composition by area
4%
7%
8%
49%
12%
20%
E-Commerce Social Media Gaming
Suchmaschine Online-Reisen Video-Plattform
*Source: Solactive, as of July 31, 2020. The Solactive China Internet Performance Index is an index calculated, published, and distributed by Solactive AG.
To follow the index visit: www.solactive.com
8Public
Backtesting for the past 18 months:
the index compared to the CSI 300 and S&P 500 August 2020
200
180
Indexed performance from January 2, 2019
160
140
120
100
80
60
Solactive China Internet Performance-Index CSI 300 Index Nasdaq 100
Source: Bloomberg, July 13, 2020
Note: Past performance and simulations are not reliable indicators of future performance.
9Public
Product details
Solactive China Internet Performance Index August 2020
Must be subscribed to by:
PRODUCT DETAILS* August 28, 2020, at 3.00 p.m. CET
SSPA product type Tracker Certificate (1300)
Underlying Solactive China Internet Performance Index
Initial fixing/payment August 31, 2020/September 8, 2020
Duration Open end
Management fee 0.90%
Issuer Bank Vontobel AG, Zurich (Moody’s long-term deposit rating: Aa3)
Index calculation agent Solactive AG, Platz der Einheit 1, 60327 Frankfurt am Main, Germany
Currency CHF USD
ISIN/symbol CH0450817272 / ZSBAAV CH0450817264 / ZSOASV
Issue price CHF 101.50 USD 101.50
(incl. CHF 1.50 issuing commission) (incl. USD 1.50 issuing commission)
Reference price certificate CHF 100.00 USD 100.00
Details page Term sheet Details page Term sheet
*All information is indicative and may be adjusted. Only the final terms published on www.investerest.com together with the associated notifications and adjustments are legally binding.
SSPA product type: Tracker Certificate (1300) essentially maps the performance of the underlying. It must be noted that an investment in an Open End Tracker Certificate carries largely the same risks as a direct 10
investment in the underlying: in particular, the corresponding foreign currency, market, and price risks. Open End Tracker Certificates do not generate ongoing returns and offer no capital protection.Public
Index composition*
Solactive China Internet Performance Index August 2020
Tencent Holdings Ltd Alibaba Group Holding JD.com Inc Pinduoduo Inc NetEase Inc ADR
Tencent Holdings Ltd is a Alibaba is a Chinese tech JD.com, also known as Pinduoduo operates an NetEase was established in
global multinational multinational specialized in e- Jingdong and formerly called interactive e-commerce 1997 and develops and
conglomerate established in commerce, retail, Internet, 360buy, is a Chinese e- platform in China and operates online PC and
1998. Its subsidiaries around and technology. The commerce company with its throughout the world. The cellphone games, advertising
the world specialize in various company, established in 1999 headquarters in Beijing. By platform is the second-largest services, e-mail services, and
Internet-related services and in Hangzhou, Zhejiang, also transaction volume and sales, it online market place in China, e-commerce platforms in
products, entertainment, offers electronic payment is one of the two major B2C measured by the number of China.
artificial intelligence, and services. online retailers in China and a users and orders.
technology. key competitor of Tmall, which is
managed by Alibaba.
Baidu Inc – Spon ADR Trip.com Group Ltd 58.com Inc iQIYI Inc JOYY Inc
Baidu is a multinational Trip.com Group is a Chinese The company’s business iQIYI mainly offers online JOYY allows users to form and
Chinese technology company provider of travel services consists of its advertisement entertainment services. The organize groups of various sizes
specializing in Internet-related such as accommodation platforms. They enable local company mostly provides to discover and participate in a
services and products as well reservations, ticket traders and consumers to video content such as movies, range of online activities,
as artificial intelligence. It is purchases, and package and make contact, exchange television games, variety including music shows, online
one of the largest AI and business trips. The company, information, and do business shows, and animated films via games, dating shows, live game
Internet companies in the established in 1999, owns and in China. These platforms its platform. broadcasts, and e-learning.
world. operates the online travel include 58, Ganji, and Anjuke.
agents Trip.com, Skyscanner,
Qunar, and Ctrip.
* As of end of July 2020; current index composition can be obtained free of charge from Solactive AG, the index calculation agent. 11Public
Disclaimer August 2020
This publication constitutes marketing material according to Art. 68 of the Swiss Financial Services Act (FinSA) and is intended solely for information purposes. It
does not constitute investment advice or an investment recommendation and does not contain an offer or an invitation to make an offer. It does not replace the
qualified consultation necessary before any purchase decision, particularly with respect to all associated risks. We will be happy to provide you with the legally
binding documents on the stated financial products such as the basic information sheet or the prospectus as well as the information brochure “Risks in Trading in
Financial Instruments” free of charge at any time. Investors should read the relevant product documentation before purchasing derivative products.
The scenarios shown in this publication do not provide any information regarding the actual performance of the underlying, only serve as illustrative examples and are
not the result of a financial analysis.
This information also includes details relating to the past. Past performance is not a reliable indicator of future results.
This information contains details relating to simulated past performance. Past performance is not a reliable indicator of future results.
This information contains details relating to future performance. Such forecasts are not a reliable indicator of future performance.
This publication was compiled by the CoE Structured Solutions & Treasury organizational unit of our institution and is not the result of a financial analysis.
Structured products are not considered collective investments according to the Swiss Federal Act on Collective Investment Schemes (CISA) [as of July 1, 2016] and
are thus not subject to the approval and supervision of the Swiss Financial Market Supervisory Authority (FINMA). Investments in structured products are subject to
the default risk of the respective issuer/guarantor and other specific risks.
This publication may not be reproduced, in whole or in part, without the written consent of Vontobel. This publication and the financial products presented therein are
not intended for individuals subject to a place of jurisdiction that limits or prohibits sale of the financial products or the dissemination of this publication or the
information contained therein. All information is subject to change.
For any questions you may have concerning our products, please call us at +41 58 283 71 11. We would like to point out that the conversations on this line are
recorded. ©Bank Vontobel AG. All rights reserved
The Solactive China Internet Performance-Index is calculated by Solactive AG (“Licensor”). The Open-End Tracker Certificate on the Solactive China Internet
Performance-Index is not sponsored, promoted, or sold by the Licensor, nor does the Licensor support it in any other way or form, and the Licensor in no way offers
any expressed or implied guarantee or warranty, neither with regard to the results from using the index nor with regard to the index status at any specific point in time
nor in any other regard.
12Public
August 2020
Michael Haupt
Thematic Investments
T +41 58 283 74 94
michael.haupt@vontobel.com
Bank Vontobel AG
Gotthardstrasse 43
8022 Zurich
T +41 58 283 71 11
vontobel.com/am
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