Blockchain Minute
Capping a strong year, the Amplify Transformational Data Sharing ETF (BLOK) rose 45.5% in the fourth quarter and 90.2% in 2020 despite the global coronavirus pandemic-induced financial-market selloff early in the year.
A number of factors buoyed markets for the greater part of 2020—primarily the massive liquidity injection from the U.S. Federal Reserve and other central banks worldwide, as well as fiscal stimulus measures aimed at mitigating the economic fallout from the pandemic. The markets’ upward momentum carried through the fourth quarter amid signs of improvement in the U.S. economy, coronavirus vaccine prospects and the strong performance of technology stocks.
A number of ETF holdings performed well in the fourth quarter and the full year as investor interest remained high for blockchain companies benefiting from the continuing trend toward digital transactions.
The linchpin technology powering bitcoin and other cryptocurrencies has become mainstream in 2020, owing to coronavirus crisis-induced momentum in digital payments and contactless trading, according to a Nasdaq report. Cryptocurrencies, which hold the potential to revolutionize the process of peer-to-peer and remittance transactions, have gained strongly from the decentralized system, low fees, transparency of distributed ledger technology, protection from consumer chargebacks and quick international transfers, the report stated.1
Several of BLOK’s holdings flourished in the fourth quarter and the full year, recording triple-digit price gains. Notable contributors for the quarter and the year were bank-holding company Silvergate Capital Corp. and merchant bank Galaxy Digital Holdings.
Galaxy Digital reported that its trading business delivered the best quarter in its history in the third quarter, with trading volume of approximately $1.4 billion in the period, up 75% year over year. Galaxy attributed the increase in trading volume to close management of its global counterparty base, which grew by 30 new counterparties in the third quarter, the expanding rollout of its electronic trading platform, and the growth of its crypto derivatives business.2
The worst performers in Q4 were Overstock.com Inc. and Ebang International Holdings. Banco Santander was the year’s primary detractor.
The long-term outlook for blockchain remains positive amid increased demand for digital transactions. Additionally, the pandemic has presented new challenges and exposed loopholes in the current digital ecosystem, including data tracing, security, visibility and management, as well as supervision. We believe blockchain technology can help address those issues.
1Source: Nasdaq, “What to Ride the Bitcoin Wave to New Highs?” 12/22/20
2Source: “Galaxy Digital Announces 3rd Quarter 2020 Financial Results” 11/13/20
The Blockchain Minute
BLOK Top 10 Holdings and Standard Performance
Online Retail Wrap-Up
In a pivotal year for online sales, U.S. retail e-commerce thrived as consumers relied heavily on digital shopping due to the global coronavirus pandemic.
Capping a strong 2020, the Amplify Online Retail ETF (IBUY) advanced 30.3% in the fourth quarter and 123.8% in 2020 despite the financial-market selloff early in the year.
A number of factors buoyed markets for the greater part of 2020—primarily the massive liquidity injection from the U.S. Federal Reserve and other central banks worldwide, as well as fiscal stimulus measures aimed at mitigating the economic fallout from the pandemic. The markets’ upward momentum carried through the fourth quarter amid signs of improvement in the U.S. economy, coronavirus vaccine prospects, and the strong performance of technology stocks.
IBUY benefited from the continued increase in U.S. e-commerce sales, as the pandemic has accelerated e-commerce growth in 2020, with online sales reaching a level not previously expected until 2022, according to an eMarketer report.1
U.S. e-commerce sales are forecast to reach $794.50 billion this year, up 32.4% year-over-year, as consumers continue to avoid stores and opt for online shopping. “We’ve seen e-commerce accelerate in ways that didn’t seem possible last spring, given the extent of the economic crisis,” said Andrew Lipsman, eMarketer principal analyst at Insider Intelligence. “While much of the shift has been led by essential categories like grocery, there has been surprising strength in discretionary categories like consumer electronics and home furnishings that benefited from pandemic-driven lifestyle needs.”1
Several ETF holdings posted double- to triple-digit gains in the fourth quarter and the full year.
Notable contributors for Q4 were personal styling firm Stitch Fix, Inc. (+116.4%), and international online marketplace firm Jumia Technologies AG (+405.0%).
For the year, top contributors were Overstock.com, Inc. (+481.9%) and exercise equipment / media company Peloton Interactive, Inc. (+434.2%). Both companies benefited from the stay-at-home trend for most of the year.
The most significant detractors in Q4 were Overstock.com (-34.0%) and Wayfair, Inc. (-22.4%). Overstock’s share price declined in Q4 despite a better-than-expected earnings report for the third quarter.
For 2020, casual apparel retailer Land’s End, Inc. (-63.9%) and Cimpress PLC (-30.2%) were the worst performers. Land’s End reported a slow start to the fourth quarter of its fiscal year 2020. The company’s chief executive officer Jerome Griffith said the warmer start to the winter season has hit Lands’ End’s heavy outerwear category. “If we couple that with people staying home and indoors and not commuting because of Covid, the demand for heavy outerwear just isn’t there yet,” he said.2
Over the long term, the outlook for retail e-commerce remains positive. eMarketer forecasts ecommerce sales will reach 14.4% of all U.S. retail spending this year and 19.2% by 2024. Excluding gas and auto sales (categories sold almost exclusively offline), e-commerce penetration jumps to 20.6%.1
“There will be some lasting impacts from the pandemic that will fundamentally change how people shop,” said Cindy Liu, eMarketer senior forecasting analyst at Insider Intelligence. “For one, many stores, particularly department stores, may close permanently. Secondly, we believe consumer shopping behaviors will permanently change. Many consumers have either shopped online for the first time or shopped in new categories (i.e., groceries). Both the increase in new users and frequency of purchasing will have a lasting impact on retail.”1
1Source: eMarketer, “US Ecommerce Growth Jumps to More than 30% 10/12/20
2Source: Milwaukee Business Journal, “4th Quarter Starts Slowly for Land’s End 12/10/20
Online Retail Wrap-Up
IBUY Top 10 Holdings and Standard Performance
Battery Charge
Capping a strong year, the Amplify Lithium & Battery Technology ETF (BATT) rose 53.4% in the fourth quarter and 44.4% in 2020 (market price, as of 12/31/20) despite the global pandemic-induced financial-market selloff early in the year.
A number of factors buoyed markets for the greater part of 2020—primarily the massive liquidity injection from the U.S. Federal Reserve and other central banks worldwide, as well as fiscal stimulus measures aimed at mitigating the economic fallout from the pandemic. The markets’ upward momentum carried through the fourth quarter amid signs of improvement in the U.S. economy, coronavirus vaccine prospects and the strong performance of technology stocks.
BATT, which has exposure to critical battery metals and electric vehicle (EV) companies, benefited from robust demand for EVs. A variety of catalysts have fueled the industry’s growth, including technological advancements, eco-friendly government regulations (such as tax rebates), the increased affordability of EVs, and improved availability of charging infrastructure.1
The world’s leading EV maker, Tesla, which joined the S&P 500 Index in December, remained at the forefront of the EV industry growth. The company achieved its goal of delivering 500,000 cars in 2020.2 “Electric-vehicle sales might still be in the single-digit range of overall vehicle sales, but that number continues to grow and a good part of that growth is from Tesla,” reports Car and Driver.3
Worldwide, electric car sales increased to a near-record 342,000 units in October (September’s 345,000 was the record), up 127% from October 2019, according to the latest data available. The numbers do not include Tesla sales reported in late December. In China, electric car sales reached 147,000 units in October, up 120% from October 2019. European electric car sales rose to 147,000 units in October, up 195% from October 2019.4
Industry analysts expect continued robust growth for the EV market worldwide. Research firm S&P Global reported that the share of EV sales in the European Union is expected to triple in 2020, thanks to the bloc’s new CO2 emissions targets, citing a study by environment advocacy group Transport & Environment. T&E expects the share of electric cars to reach 10% in 2020 and 15% in 2021. In China, the state cabinet approved a 15-year development plan for its clean energy vehicle industry, giving carmakers and the market a larger say in developing the new energy vehicle sector, according to a China Daily report.5
BATT’s top contributor for the 4th quarter was Nio, Inc., a pioneer in China’s premium smart-EV market. The company delivered 7,007 vehicles in December 2020, setting a new monthly record, representing a 121.0% year-over-year growth.6 Contemporary Amperex Technology, Inc. and BYD Co, Ltd. also boosted returns for the quarter.
U.S.-based Nikola Corp. and Hong Kong-based Jinchuan Group International primarily detracted from performance for the quarter. Jinchuan Group revenues were affected by the drop in copper and cobalt prices in the first half of 2020.7
The year’s top contributors were Lithium Americas Corp. (+291.05%) and Nio, Inc. (+83.92%). Lithium Americas has benefited from forecasts of strong lithium demand in the next few years.
Katanga Mining Ltd. (-56.85%) and Panoramic Resources Ltd. (-68.03%) primarily detracted from 2020 returns.
Looking ahead, the outlook for EVs remains positive as more consumers welcome the prospect of a clean-energy future. A Deloitte report estimated that EVs will reach 31.1 million units by 2030 from 2.5 million units in 2020. The report projected that by 2030, China will capture 49% of the global EV market, Europe will account for 27%, and the United States will hold 14%.1
1Source: “4 Stocks (Not Named Tesla) Set to Ride the Upcoming EV Boom” 12/22/20
2Source: The New York Times: “Tesla Says It Hit Goal of Delivering 500,000 cars in 2020” 1/2/21
3Source: Car and Driver: “Tesla Delivered Record-Breaking 139,300 Vehicles in 3rd Quarter” 10/2/20
4Source: Seeking Alpha: EV Company News For the Month of November 2020 12/2/20
5Source: S&P Global Market Intelligence, 10/12/20
6Source: NIO Investor Relations Press Release 1/3/21
7Source: Seeking Alpha: Nickel Monthly News for July 2020 7/20/20
The Battery Charge
BATT Top 10 Holdings and Standard Performance
International Online Retail Wrap-Up
In a pivotal year for online sales, international retail ecommerce thrived as consumers relied heavily on digital shopping due to the global coronavirus pandemic
Capping a strong 2020, the Amplify International Online Retail ETF (XBUY) advanced 25.7% in the fourth quarter and 82.1% in 2020.
A number of factors buoyed markets for the greater part of 2020—primarily the massive liquidity injection from the U.S. Federal Reserve and other central banks worldwide, as well as fiscal stimulus measures aimed at mitigating the economic fallout from the pandemic. The markets’ upward momentum carried through the fourth quarter amid signs of improvement in the U.S. economy, coronavirus vaccine prospects and the strong performance of technology stocks.
XBUY continued to benefit from the significant shift away from brick-and-mortar stores into online channels, a trend accelerated by the pandemic.
E-commerce is the fastest-growing segment of the retail market in Europe, according to a report from the Centre for Retail Research. Combined ecommerce sales in Western Europe (the United Kingdom, Germany, France, Netherlands, Italy and Spain) are forecast to reach £294.192 billion in 2020, representing a 31.1% growth, with online sales representing 16.2% of total retail sales in 2020.1
In China, consumers are forecast to spend $2.09 trillion (RMB14.44 trillion) on retail e-commerce in 2020, a 16% increase from 2019, according to research firm eMarketer.2
A number of ETF holdings posted double- to triple-digit gains in the fourth quarter and the year as consumers stayed home in record numbers, driving increased digital transactions.
For the quarter and the year, notable contributors included Jumia Technologies AG, and Farfetch Ltd. Jumia is the leading panAfrican ecommerce player and is likely to benefit from digitization and e-commerce adoption in Africa over the coming decades.
Under-perfoming names in Q4 included China-based Alibaba Group Holdings and Iqiyi, Inc. In its latest quarterly earnings (Q2 fiscal year 2020), Alibaba reported revenues that fell short of analyst expectations. While the company posted growth in adjusted earnings, it was the slowest pace of growth in eight quarters for earnings, and the worst growth for revenue in at least 13 quarters.3 Uxin Ltd. and Pchome Online, Inc. were the most significant detractors from 2020 returns.
The long-term outlook for global e-commerce remains positive. According to a report by the Organisation for Economic Cooperation and Development (OECD), the COVID-19 crisis has enhanced dynamism in the e-commerce landscape across countries and has expanded the scope of e-commerce, including through new firms, consumer segments (e.g., elderly) and products (e.g., groceries). “Meanwhile, e-commerce transactions in many countries have partly shifted from luxury goods and services towards everyday necessities, relevant to a large number of individuals,” the report stated.4
1 Source: Centre for Retail Research, “Online: UK, Europe & N. America 2020 Estimates”
2 Source: eMarketer, “Chine E-commerce 2020” June 2020
3 Source: Investopedia.com, “Alibaba Earnings: What Happened” 11/5/2020
4 Source: OECD, “E-commerce in the time of COVID-19” 10/7/2020
International Online Retail Wrap-Up
XBUY Top 10 Holdings and Standard Performance