Emerging markets are still widely viewed as dependent on the materials and energy sectors. This is out of synch with reality.
By way of example, the materials and energy sectors accounted for 33% of the MSCI Emerging Markets index in January 2008. Fast forward to July 2017 and their share has dwindled to 14% . Meanwhile, technology has expanded briskly to 27% – making it the most tech-heavy index in the MSCI stable.
Conventional wisdom has it that a dominant player in the technology industry that manages to open up a big lead over the competition ends up perpetuating that dominance – look at Facebook, Amazon and Google. But, in a major economy like China, things are not shaping up that way, with the US-based tech giants very marginal players in this massive and fast-growing market.
China already has the largest online population in emerging markets (EM) – over 730 million, but still only 50% of the total population. And, whereas the US led the way in the development of PC-based internet services, China is stealing a march in the development of mobile internet services – around 90% of users currently access the web by smartphone.
Importantly, these Chinese companies are now extending their coverage across Asia. Armed with Asia-centric games, social networking and e-commerce platforms, we believe they will give the hitherto dominant US names very tough competition.
 Source: Factset and MSCI