Can’t decide between Grab and Sea Ltd? Here’s an ETF to gain access to ASEAN tech giants

By Beansprout • 07 Jun 2023 • 0 min read

The CSOP iEdge Southeast Asia + TECH Index ETF offers diversified exposure to a basket of technology leaders in the region, including Sea Limited and Grab.

CSOP iEdge ASEAN Tech+ Index ETF

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This post was created in partnership with CSOP Asset Management Pte. Ltd. All views and opinions expressed in this article are Beansprout's objective and professional opinions. 

What happened?

Shopee, Grab and Gojek are probably familiar names to most Singaporeans, whether you are shopping online or hailing a ride to your dinner appointment. 

These technology companies have become more intertwined with our daily lives with the convenience they are able to offer. 

In fact, online sales have grown to 13% of total retail sales in March 2023 from just 5% in March 2019, according to data from the Ministry of Trade & Industry. 

Looking around, it’s not just within Singapore that we have seen such significant growth in the proliferation of technology companies. 

Southeast Asia has been a hotbed of technology development, boosted by rising consumer incomes and the adoption of digital solutions. 

Let’s take a further look at why everyone’s so excited about the Southeast Asian technology sector. 

#1 – Booming working-age population and new consumers

Here’s something you may not know – Southeast Asia is the most populous region in the world after India and China. 

The region is home to close to 690 million people as of June 2023, according to Worldometer. 

Not only does Southeast Asia have a large population, but they are also young and tech-savvy, and hence more likely to spend time on social media and do their shopping online. 

And here’s another trend that makes Southeast Asia so exciting – its working-age population is expected to increase by 40 million by 2030. In contrast, China’s working-age population is forecasted to fall by 30 million over the same period! 

With rising incomes, this will bring about many new consumers with the ability to spend more across the region. And when they do so, it will likely be on a digital platform. 

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#2 – Fast growing internet sector

Against this backdrop, it is no surprise that the total number of internet users in Southeast Asia has grown to 460 million in 2022 from 360 million in 2019. That’s a sharp increase of 100 million internet users in just three years! 

This has led to forecasts that the Southeast Asian digital economy could reach up to $1 trillion in gross merchandise value in 2030 from $200 billion in 2022. 

That would represent a growth of close to two times the economic growth over this period of time. And let’s not forget this – Southeast Asian economies are already expected to be some of the fastest-growing in the world! 

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Investing in the ASEAN technology sector

For retail investors wanting to invest in the growing technology sector, it has often come down to a few single stock names which are listed mainly in overseas markets. 

However, some investors may find it difficult to pick the winners even against the backdrop of a growing technology sector.

After all, it might be hard to predict whether e-commerce or food delivery will grow faster, or whether another ride-hailing company will be launched to disrupt the incumbents. 

Introducing the CSOP iEdge Southeast Asia+ TECH Index ETF

The CSOP iEdge Southeast Asia+ TECH Index ETF offers investors exposure to the rapidly growing digital economy in Southeast Asia. 

This is done by holding a basket of stocks which are based in Singapore, Indonesia, Thailand, Vietnam, Malaysia and India. 

These companies are involved in technology-related sectors such as e-commerce, ride-hailing & food delivery, fintech, online travel, and online media. 

As its name suggests, the CSOP iEdge Southeast Asia+ TECH Index ETF tracks the performance of the iEdge Southeast Asia+ TECH Index.

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Source: CSOP Asset Management 

 

What are the top 10 holdings of the iEdge Southeast Asia+ TECH Index?

The key constituents of the index include familiar names such as Sea Ltd, the parent of e-commerce company Shopee, as well as Grab Holdings. 

Some other notable names in index include leading tech hardware companies in Southeast Asia such as Delta Electronics and Venture Corp. 

To provide diversification from just ASEAN tech names, the index also includes Indian tech companies such as Infosys and Wipro, which are leading IT services companies that are listed in the US. 

The iEdge Southeast Asia+ TECH Index has a maximum holding of 30 stocks, and the top 10 holdings are shown in the table below. 

Company nameIndex WeightCountry of Listing
Sea Ltd13.20%United States
Delta Electronics Thailand PCL12.34%Thailand
Astra International Tbk PT9.53%Indonesia
Infosys Ltd9.26%United States
Wipro9.16%United States
Grab Holdings Ltd8.93%United States
Venture Corp7.16%Singapore
Jardine Cycle & Carriage Ltd4.26%Singapore 
Elang Mahkota Teknologi Tbk PT2.94%Indonesia
MakeMyTrip Ltd2.43%United States
Source: SGX iEdge, as of 31st March 2023 

 

On aggregate, the country of listing of these companies are fairly diverse, with 43% of these companies listed in the US. The remaining of these companies are split between listings in Thailand, Indonesia, Singapore and Malaysia. 

Looking at the revenue breakdown, the diversification is even more significant. Indonesia represents the largest market for these companies based on revenue generated. Investors however will get exposure to many other fast-growing and large markets such as Thailand, China, and India.

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Source: SGX iEdge, as of 31st March 2023

 

What are the risks of the CSOP iEdge Southeast Asia+ TECH Index ETF?

#1 – Profitability of some technology companies still unproven

As with industries in a stage of rapid growth, there is uncertainty relating to whether these companies can deliver on growth expectations, and continue to do so in a sustainable way. 

For example, some e-commerce players have been cutting back on promotions and discounts to boost profitability. 

However, it remains to be seen if such a reduction in incentives will slow down the adoption of their services.

#2 – High interest rates could dampen the valuation of technology companies.

We’ve seen the US Federal Reserve raise interest rates to bring down inflation over the past year. 

However, the valuation of high-growth companies has also come down with the rising interest rates, as investors gravitate towards less risky assets such as government bonds. 

While there are expectations that the Fed may start to pause on its interest rate hikes, sustained high interest rates could continue to dampen the valuation of these technology companies. 

How to invest in the CSOP iEdge Southeast Asia+ TECH Index ETF?

The CSOP iEdge Southeast Asia+ TECH Index ETF is expected to list on the Singapore Exchange on 20 June. The SGD Counter Stock Code is SQQ and the USD Counter Stock Code is SQU.

Investors who are interested in the ETF can subscribe to the Initial Offering Period through these authorized distribution brokers; Phillip Securities, iFast FSM One,  moomoo SG, Tiger Brokers and through DBS ATMs and its mobile app.

Thereafter, investors who wish to invest in the ETF can do so via their regular local stock brokers, just like how they go about buying regular stocks for their portfolio. 

The Singapore dollar version of the ETF is priced at S$1 per share. With a minimum lot size of 1, this would mean that you would be able to access the CSOP iEdge Southeast Asia + TECH Index ETF for as little as S$1, excluding brokerage fees and other exchange fees. 

The CSOP iEdge Southeast Asia+ TECH Index ETF is classified as an Excluded Investment Product (EIP), which means there are no additional requirements for investors to meet to invest in it. 

What would Beansprout do?

There are many reasons to be excited about the growing technology industry in Southeast Asia. 

For investors who want to get exposure to rising digital adoption in the region but do not want to spend time analyzing stocks, the CSOP iEdge Southeast Asia+ TECH Index ETF offers a convenient way to get access to these companies.   

The ETF offers you diversified exposure to a basket of technology leaders in the region, including Sea Limited and Grab.

So before you next use your e-commerce or ride-hailing app, read more about the CSOP iEdge Southeast Asia + TECH Index ETF here. 

Important information

This advertisement is purely for informational purposes only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. It should not be relied upon as financial advice. Any securities mentioned herein are for illustration purposes only and should not be construed as a recommendation for investment. You should seek advice from a financial adviser before making any investment. In the event that you choose not to do so, you should consider whether the investment selected is suitable for you. Investments in funds are not deposits in, obligations of, or guaranteed or insured by CSOP Asset Management Pte. Ltd. (“CSOP Asset Management”).

Past performance or any prediction, projection or forecast is not indicative of future performance. The Fund or any underlying fund may use or invest in financial derivative instruments. The value of units and income from them may fall or rise. Investments in the Fund are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus (including the risk warnings) and product highlights sheet of the Fund, which are available and may be obtained from appointed distributors of CSOP Asset Management or the website (https://www.csopasset.com/sg/home.html) before deciding whether to invest in the Fund.

The information contained herein may not be copied, reproduced or redistributed without the express consent of CSOP Asset Management. While reasonable care has been taken to ensure the accuracy of the information as at the date of publication, CSOP Asset Management does not give any warranty or representation, either express or implied, and expressly disclaims liability for any errors or omissions. Information may be subject to change without notice. CSOP Asset Management accepts no liability for any loss, indirect or consequential damages, arising from any use of or reliance on this document. This advertisement has not been reviewed by the Monetary Authority of Singapore.

The performance of the ETF’s price on the Singapore Exchange Securities Trading Limited (“SGX-ST”) may be different from the net asset value per share of the ETF. The ETF may also be delisted from the SGX-ST. Transaction in shares of the ETF will result in brokerage commissions. Listing of the shares does not guarantee a liquid market for the shares. Shares of the ETF may be bought or sold throughout trading hours of the SGX-ST through any brokerage account. Investors should note that the ETF differs from a typical unit trust and shares may only be created or redeemed directly by a participating dealer in large creation or redemption shares. Investors may only redeem the shares with CSOP Asset Management under certain specified conditions.

Index Provider Disclaimer

The CSOP iEdge Southeast Asia+ TECH Index ETF is not in any way sponsored, endorsed, sold or promoted by Singapore Exchange Limited and/or its affiliates (collectively, “SGX”) and SGX makes no warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Index and/or the figure at which the Index stand at any particular time on any particular day or otherwise. The Index is administered, calculated, and published by SGX. SGX shall not be liable (whether in negligence or otherwise) to any person for any error in the CSOP iEdge Southeast Asia+ TECH Index ETF and the Index and shall not be under any obligation to advise any person of any error therein. “SGX” is a trademark of SGX and is used by the Manager under license. All intellectual property rights in the Index vest in SGX. 

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