The Next Big Theme: November 2020

The Next Big Theme: Thematic Newsletter Global X ETFs

CleanTech

Asia’s Mission to Eliminate Carbon Emissions

South Korea, China, and Japan are taking steps to zero out their carbon footprints. South Korea passed a $38 billion Green New Deal that aims to triple renewable electricity generation by 2025.1 If that happens, South Korea could achieve carbon neutrality by 2050. As the world’s largest polluter, China’s goal of reaching carbon neutrality by 2060 could cost upward of $15 trillion.2 As of now, China employs carbon sinks and large-scale carbon capture, utilization, and storage as their primary methods for emissions reduction. China’s success is critical to keeping global temperatures from rising by more than 1.5°C above pre-industrial levels by the end of the century, a key benchmark for climate change mitigation.3 Additionally, Japan recently announced their plan to reach carbon neutrality by 2050, using offshore wind generation and battery storage to reduce emissions.4

FinTech

Cryptocurrency Meets Mainstream Digital Payments

PayPal, a pioneer in the digital payments industry, now offers users the ability to transact with Bitcoin and other cryptocurrencies. The platform’s expanded cryptocurrency functionality also allows users to buy, hold, and sell Bitcoin, Bitcoin Cash, Ethereum, and Litecoin.5 For PayPal, adding new payment options diversifies the types of transactions users can conduct on the platform and can mean increased user monetization. For perspective, the company’s average revenue per user (ARPU) in Q3 2020 was $15.78, a stark contrast from the $300–500 seen in traditional consumer banks.6,7 Square and Robinhood are two examples of companies that increased revenue after implementing cryptocurrency services. Square reported that revenue from Bitcoin reached $875 million in Q2 2020, a 600% year-over-year increase.8

Video Games & Esports

Roblox Hits the IPO Button

Online gaming platform Roblox, that allows users to program games and play games created by other users in an immersive 3-D world, officially announced its plan to go public. According to one estimate, the IPO could boost the company’s valuation to as much as $8 billion, double the $4 billion valuation estimated in February of this year.9 As of July, Roblox had 150 million monthly active users and more than $140 million annualized revenue. The company’s potential capital raise is another sign that the video game industry is on the cusp of a transformational decade, driven by cloud gaming, new consoles and new monetization opportunities.10

E-commerce

Prime Time for U.S. E-commerce

Amazon’s Prime Day, which offers Prime users two days of savings and deals from businesses, added further fuel to what is fast becoming a booming e-commerce economy. Taking place from October 13-14th, global Prime Day sales totaled $10.4 billion, up 45.2% from $7.2 billion in 2019.11 Moving Prime Day to October from July likely helped, with consumers still shopping online due to the pandemic and starting their holiday gift shopping. While an encouraging sign of greater e-commerce penetration in the U.S., Prime Day still trails Alibaba’s Singles’ Day event in sales by a wide margin due regional differences in e-commerce penetration. In China, retail e-commerce penetration sits at 25.2%, versus 16.1% in the U.S. However, U.S. e-commerce is rapidly growing – online sales in the U.S. are expected to total $795 billion in 2020, up 32% year-over-year.12 Aside from Amazon, other retailers including Walmart, Target, Kohl’s and J.C. Penney are hosting their own events and similarly benefitting from heightened e-commerce activity.13

Genomics

Nano-Carriers Could Enable Precision Oncology

Scientists in Germany and Spain developed a synthesized DNA transport system that could change the way we deliver cancer drugs to diseased cells. In summary, the delivery system uses synthetic nano-carriers made up of mucin, glycerol, and synthetic DNA to package therapeutics, which are then only released upon encountering an RNA sequence unique to cancer cells. Thus far, scientists tested the system in tumor models in cell cultures to encouraging results. With further and expanded testing, this drug delivery mechanism could lead to better options than chemotherapy and radiation, which indiscriminately target healthy and damaged cells. Additionally, researchers anticipate being able to apply these concepts to treating other diseases with greater precision.14

Robotics & The Internet of Things

Making Work from Home More Convenient

Tokyo-based robotics company, Telexistence, is on a mission to redefine the concept of work from home. With the company’s help, a convenience store in Tokyo Bay now uses a robot for back-end tasks, including taking inventory and stocking shelves. The robot has a boomerang-shaped head and hands capable of grabbing objects with suction and opposable thumbs. But what makes this robot unique is that it’s moved by a human performing the actions from a remote location. Similar to a puppeteer, workers determine the robot’s movements in real time, rather than through preprogrammed, coded instructions. One reason why Telexistence developed the technology is in response to Japan’s chronic labor shortage. Though the technology is still too expensive for mass adoption, it appears to be just the beginning of what could be a revolutionary long-term project.15

THE NUMBERS

The following charts examine returns and sales growth expectations by theme, based on their corresponding ETFs.

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