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Global X debuts in Europe with video game & esports and telemedicine & digital health ETFs

Global X has unveiled its first European domiciled UCITS ETFs – a pair of thematic technology-focused strategies that transcend traditional sector, industry, and geographic classifications. The New York-based firm, which announced its entrance to the…

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Global X has unveiled its first European domiciled UCITS ETFs – a pair of thematic technology-focused strategies that transcend traditional sector, industry, and geographic classifications.

Global X debuts in Europe with video games & esports and telemedicine & digital health ETFs

New York-headquartered Global X ETFs has debuted in Europe with two thematic ETFs targeting the video games & esports and telemedicine & digital health industries.

The New York-based firm, which announced its entrance to the European market earlier this month, has debuted with the Global X Video Games & Esports UCITS ETF and the Global X Telemedicine & Digital Health UCITS ETF.

The funds have listed on the London Stock Exchange and are linked to indices provided by Solactive.

Video Games & Esports

Tracking the Solactive Video Games & Esports v2 Index, the Global X Video Games & Esports UCITS ETF provides investors with targeted exposure to the video games and esports industries – entertainment genres that have seen huge growth in 2020 owing to pandemic-related stay-at-home orders.

The index includes companies involved in the development or publishing of video games, companies involved in the streaming and distribution of video gaming and esports content, and companies involved in the manufacture of hardware used in video games and esports.

Japan, United States, China and South Korea are the largest country exposures which together constitute over 80% of the index. Significant positions include Bilibili, Nexon, Take-Two Interactive, Nintendo, Sea, Capcom, Embracer, Konami, Electronic Arts, and Activision Blizzard.

The fund has a total expense ratio of 0.50% and is available in USD (HERU LN) and GBP (HERG LN) share classes. Income is distributed semi-annually.

Global X offers a US-domiciled version of the strategy in the form of the Global X Video Games & Esports ETF (HERO US). Launched in October 2019, this Nasdaq-listed fund has grown to $545m in assets.

Telemedicine & Digital Health

The Global X Telemedicine & Digital Health UCITS ETF tracks the Solactive Telemedicine & Digital Health Index and offers investors access to companies driving advancements in the telemedicine and digital health theme.

The Covid-19 pandemic appears to have accelerated the use of digital technologies in health care, with Global X noting that some health care providers are reporting increases in the deployment and uptake of remote telehealth appointments by as much as 175x in 2020.

The underlying index includes companies involved in telemedicine, health care analytics, connected health care devices, and administrative digitalisation. Despite the global mandate, the index is heavily tilted to US stocks, which make up in excess of 80% of the index. Significant positions include M3, Nuance Communications, Neogenomics, Alibaba Health, Agilent Technologies, Illumina, Guardant Health, Cerner, Omnicell, and iRhythm Technologies.

Global X offers a version of this strategy in the US, too, namely the Global X Telemedicine & Digital Health ETF (EDOC US), listed on Nasdaq. Only introduced in July this year, the fund has raced to $524m in assets, making it one of the best-performing ETF launches of the year as measured by asset gathering.

The fund has a total expense ratio of 0.68% and is available in USD (EDOC LN) and GBP (EDOG LN) share classes. Income is distributed semi-annually.

Index design

The two indices follow almost identical construction methodologies.

Constituents are selected using Solactive’s proprietary ARTIS natural language processing algorithm which screens publicly available information to identify companies that have or are expected to have significant exposure to the particular theme, i.e. video games and esports or telemedicine and digital health.

The algorithm then ranks the companies it identifies according to the frequency with which the company is referenced in relation to specific keywords, with the top-ranking companies selected for inclusion, subject to various economic pure-play and tradability criteria.

To be eligible, companies must generate at least 50% of their revenues from relevant business operations pertaining to the theme. They must also be listed in a developed market, have a market capitalization of at least $200 million, and have posted average daily value traded in the last six months of at least $2m.

The indices each comprise a maximum of 40 constituents with constituents assigned weights according to their free-float market capitalization, subject to a maximum weight of 4.5% for the video games and esports index and 4% for the telemedicine and digital health index, and a minimum weight of 0.30%. Excess weight that results from the cap constraints is redistributed proportionally.

‘Powerful themes’

Rob Oliver, Head of Business Development in Europe at Global X, commented: “We believe investors are increasingly seeking exposures beyond broad-market indices to achieve their unique financial goals. Global X has spent the last decade developing a comprehensive suite of thematic strategies targeting among the highest potential growth areas of the market. We are thrilled to broaden access in Europe to Global X’s research-driven approach to thematic investing for the first time.”

Morgane Delledonne, Global X’s Director of Research in Europe, added: “Across the global economy, digitalisation is accelerating as businesses, consumers, and governments are increasingly embracing these disruptive technologies to enhance production, quality of life and offer societal benefits.

“In health care, telemedicine & digital health are revolutionising the access to and quality of patient care, while simultaneously reducing costs. On the consumer side, video games & esports are providing immersive, mobile, and social entertainment to billions of gamers around the world, dramatically changing the way we spend our leisure time. We expect these powerful themes to continue to experience long-term growth as they further disrupt traditional economic sectors.”

The funds have each been seeded with a little over $3m in assets.

Global X is a subsidiary of Asian investment house, Mirae Asset Global Investments.

The post Global X debuts in Europe with video game & esports and telemedicine & digital health ETFs first appeared on ETF Strategy.

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Economics

Why You Shouldn’t Worry About Costco Stock

The warehouse club’s shares have been falling, but investors have nothing to worry about.

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The warehouse club's shares have been falling, but investors have nothing to worry about.

The market crash has driven stocks into a bear market panicking many investors as strong companies with solid results see their shares tank. It's a market that seems to have no safe havens as the vague specter of inflation has cast a dark shadow over the entire market, but pandemic stocks, technology companies, and the entire retail sector.

Costco (COST) - Get Costco Wholesale Corporation Report has not been immune to the drop. Despite the warehouse club operating pretty much as it always has, steadily adding members while retaining existing members, the chain has seen its share price fall 22.83% in the past six months.

That's a big drop for a chain which has been a very steady stock, usually moving upward while also paying a dividend. Costco's share price drop, however, has nothing to actually do with the company's performance. Instead, the company has fallen victim to broad concerns about retail in general.

Target (TGT) - Get Target Corporation Report, for example, saw its shares lose over 25% in value after it reported first quarter results. The chain grew its same-store sales, which was impressive given that it had seen that metric rise by 22.9% in previous-year quarter. The retailer faltered when it came to profits as earnings were cut in half year-over-year due to rising costs and supply chain issue.

Never mind that Wall Street has taken Target's strength for weakness (making money and gaining customers under these conditions is impressive), Costco shareholders have even less to be worried about.

Ting Shen/Xinhua via Getty

Why Is Costco So Strong?

Retail stocks, including Target and Costco, have suffered due to rising prices (inflation), supply chain issues, and fears over consumer spending drops. These are real concerns, but Costco has a lot of protection from those issues. The warehouse club operates on a membership model. Its profits come largely from selling memberships, not on the goods its sells its members.

Costco offers members the promise of low prices in exchange for a membership fee. The company offers a limited selection to keep prices down and it has enormous bargaining power with suppliers.

It's possible that inflation will drive prices higher on some key Costco items, but they company can simply pass those increase on without adding a markup. That makes the chain a value proposition for shoppers as these factors impact all retailers.

Costco has been able to hold its own on gross margin, according to CFO Richard Galanti speaking during the company's second-quarter earnings call.

"Moving down to the gross margin line. Our reported gross margin in the second quarter was lower year over year by 32 basis points but up 5 basis points, excluding gas inflation," he said.

Basically, aside from gas -- which is generally cheaper at Costco than anywhere else -- the company maintained its margin. It also grew its same-store sales by 11.1% excluding gas while its income rose as well.

"Net income for the quarter came in at $1.299 billion or $2.92 per diluted share. Last year's second quarter net income came in at $951 million or $2.14 per diluted share," Galanti shared.

Membership Is Costco's Key Metric

 Unlike a traditional retailer, sales aren't the key metric for Target. Membership tells investors more about the health of the company than anything else. The warehouse club needs both retain members and add new ones.

 It has done that, according to Galanti.

"In terms of renewal rates, they continue to increase. At second quarter end, our U.S. and Canada renewal rate stood at 92%, up 0.4 percentage point from the 12-week earlier at Q1 end. And worldwide rate, it came in at 89.6%, up 0.6% from where it stood 12 weeks earlier at Q1 end," the CFO shared.

Costco has seen its renewal rates go up as more members auto-renew. The warehouse club has also seen more of its members opt for the higher-priced Executive Membership, " who, on average, renew at a higher rate than non-Executive members," Galanti shared.

Membership has been growing (as it steadily has) as well, according to the CFO.

In terms of the number of members at second quarter end, member households and total cardholders, total households was 63.4 million, up 900,000 from the 62.5 million just 12 weeks earlier; and total cardholders at Q2 end, 114.8 million, up 1.7 million from the 113.1 million figure 12 weeks ago. At second quarter end, paid Executive Memberships stood at $27.1 million, an increase of $644,000 during the 12-week period since Q1 end. Executive Members, by the way, represent now 42.7% of our total membership base and 70.9% of our total sales.

So, while Costco's share price has suffered due to broader concerns and general market panic, the chain's business has not suffered. In a terrifying environment for investors, you could argue that Costco's one of the safer bets as long as you're willing to be patient.

In the short-term, stock prices may not reflect actual business results. Over time, however, the warehouse club will go back to posting steady share gains while also paying a dividend (and perhaps offering a bonus special dividend).   

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Economics

Labor Looks Set To Win In Hotly-Contested Australian Federal Election

Labor Looks Set To Win In Hotly-Contested Australian Federal Election

Update (0950ET): With almost 60% of the vote counted, it appears Anthony…

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Labor Looks Set To Win In Hotly-Contested Australian Federal Election

Update (0950ET): With almost 60% of the vote counted, it appears Anthony Albanese will return Labor from the political wilderness to government, seizing power from the Coalition after it has been almost a decade in office.

While it remains unclear if Labor can form a majority, the ALP is on track to finish ahead of the Coalition and more likely to reach a minority government, the ABC has projected.

This win means Mr Albanese will replace Scott Morrison as Prime Minister, making him the 31st person to hold the nation's top job.

*  *  *

As The Epoch Times' Aldgra Fredly detailed earlier, Australian voters cast ballots on Saturday to decide the next prime minister, as well as senators and members of Parliament, after a six-week election campaign that often centred on the economy and national security.

Electoral Commissioner Tom Rogers said Friday that 7,000 polling stations have opened as planned, despite a 15 percent turnover of its 105,000 workforces across Australia in the past week.

“While this is extraordinary, it is a pandemic election,” Rogers said in a statement, thanking those who stepped up to fill positions at polling places identified as not opening due to staff shortages.

The first polling stations will close on the country’s east coast at 6 p.m. local time (08:00 GMT). The west coast is two hours behind.

Nearly half of Australia’s 17 million electors have voted early or applied for postal votes despite loosened coronavirus restrictions. Those who tested positive for the COVID-19 will be able to access telephone voting.

Voting is compulsory for adult citizens in Australia, and failing to provide a valid reason for not voting results in a fine, which can progress to court. The fine for first-time offenders is $20, and it climbs to $50 for subsequent offences, according to the electoral commission.

Incumbent Prime Minister Scott Morrison’s centre-right Liberal-National coalition is vying for a fourth three-year term, having held 76 of the 151 seats in the outgoing parliament. Opposition leader Anthony Albanese’s centre-left Labor Party is considered by most trusted polls as the favourite to win.

(L-R) Australian Prime Minister Scott Morrison, federal opposition leader Anthony Albanese. (Martin Ollman/Getty Images, AAP Image/Lukas Coch)

One possible outcome of the upcoming federal election on May 21 is a hung Parliament where no political party can achieve a majority to govern outright (a party must win 76 seats). Instead, party leaders will be forced to negotiate a coalition with another minor party or independent to cross the benchmark to win government.

A hung Parliament has only occurred once in Australia since World War II. In 2010, both the Liberal-National coalition and Labor landed 72 seats, four votes short of a majority government. It took another 17 days before Labor leader Julia Gillard won enough support from four crossbenchers (minor party or independent MPs) after striking deals with them.

Morrison’s election campaign has focused on his party’s economic management, urging voters to support a government that delivered “a strong economy” over “a weaker one that only makes your life harder.”

He promised to lower taxes and put downward pressure on interest rates and costs of living if his government was re-elected.

Albanese pushed for Labor policies that would make child care more affordable for low-and middle-income families and improve nursing home care for the elderly, pledging to “always look after the vulnerable and the disadvantaged.”

Labor also criticized the Morrison government’s foreign policy credentials following the Solomon Islands-China bilateral security pact, calling the deal Australia’s worst foreign policy failure in the Pacific since World War II.

At the same time, the Coalition at times aggressively called into question Labor’s record with the Chinese communist regime, pointing to Chinese state-run media reports in alleging that the Labor leader was Beijing’s preferred prime minister.

In the lead up to the election, Australia’s domestic spy agency also revealed they had disrupted a plot by Beijing to install candidates in the election who they deemed as friendly and pliable.

“It’s odd the Labor Party wouldn’t say China is interfering—somehow they’re saying it’s Australia’s fault,” Morrison was quoted as saying by Sky News Australia on April 20.

“What I don’t understand is when something of this significance takes place, why would you take China’s side?”

Albanese then accused Morrison of making an “outrageous slur.”

According to a leaked draft of the Solomons-China agreement, Beijing would be able to send police, troops, and naval ships to “protect the safety of Chinese personnel and major projects in the Solomon Islands.”

Many feared that China would use the accord to establish a military base 1,700 kilometres off the Australian coast and destabilise the Indo-Pacific, although Solomon Islands Prime Minister Manasseh Sogavare had said that this would not be the case.

Tyler Durden Sat, 05/21/2022 - 08:24

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Spread & Containment

Swiss Watch Shortage Spreads From Rolex To Cartier And Tudor

Swiss Watch Shortage Spreads From Rolex To Cartier And Tudor

A top retailer of Swiss luxury watches warns robust demand and the lack of supply…

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Swiss Watch Shortage Spreads From Rolex To Cartier And Tudor

A top retailer of Swiss luxury watches warns robust demand and the lack of supply have sparked a perfect storm of global Rolex shortages that has spread to other leading brands, including Cartier and Tudor. 

CEO Hugh Brian Duffy of Watches of Switzerland Group Plc, with a network of 171 retail stores between the UK and the US, told Bloomberg on Thursday morning that sales of Rolex, Patek Philippe, and Audemars Piguet had only "modest" increases in the retailer's 2022 fiscal year, primarily because of limited supply. He said this drove demand for other high-end brands. 

"We more than doubled our increases with them," Duffy said, citing Rolex sister brand Tudor, independent Breitling, LVMH's Tag Heuer, Swatch Group's Omega, and Richemont's Cartier. 

He said the Rolex shortage had increased so much demand for certain Cartier and Tudor models, that now those are experiencing supply issues. 

"We can't get enough Santos," he said, referring to the Cartier aviator watch, adding Tudor's chronograph models are in short supply.

Sales of Swiss watches went through the roof during the pandemic as classic high-end timepieces were in high demand as central banks worldwide pumped trillions of dollars into the financial system. Hot money had to end up somewhere, and some wound up in Rolexes and other luxury Swiss brands. 

Duffy concluded the interview by saying retail demand for Rolex, Patek Philippe, and Audemars Piguet watches outweighs supply: "Demand is just off the scale for those brands. We would love to have more of them." 

And when does this Swiss watch bubble end? Will it be when central banks spark the next global recession from aggressive monetary tightening? 

Tyler Durden Sat, 05/21/2022 - 08:45

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