Top 3 From Across the New Economies
Enterprise Collaboration (+5.3%)
The pandemic has been a major catalyst for adoption and improvement of enterprise collaboration tools. As lockdowns ease, more companies are embracing a hybrid workspace model going forward. This trend continues to benefit this subsector. Two companies focused on work management platforms, Asana and Atlassian, produced strong performances over the quarter. Asana made its publicly traded debut last autumn and has accumulated an impressive number of paying users. Atlassian has been a consistent double-digit-percentage grower for years and delivered stronger-than-expected quarterly results with its ongoing pivot to cloud.
Cyber Security (+0.5%)
Tailwinds from the ongoing digital transformation, favorable security backdrop, and remote work contributed to accelerated demand for next generation security. Palo Alto Networks, Fortinet, and Zscaler were the top three contributors this quarter. All three companies reported better-than-expected revenue. They are well positioned for the ongoing firewall spending cycles as well as the focus on Secure Access Service Edge-driven Next Generation Security spending (SASE-driven NGS spending).
Smart Borders (-1.6%)
Increasing tension across borders and a rise in terrorism are projected to drive the market growth of border technology for years to come. The biggest contributor this quarter was Embraer S.A., a Brazilian aerospace and defense company. Its stock price benefited from the rightsizing trend in executive jets suitable for regional travel.
Bottom 3 From Across the New Economies
Electric Vehicles (-16.9%)
Electric Vehicles faced a tough quarter, with only five securities generating positive returns in Q3. Tesla reverted its disappointing performance in the first half of 2021. However, concerns over the Chinese regulators clamping down on large technology companies spread to the three major Electric Vehicle manufacturers: Nio, Li Auto, and XPeng. Other headwinds in the sector include Workhorse’s loss of an over USD 6 billion contract from the USPS, and Nikola’s founder Trevor Milton being charged by prosecutors with making false statements to investors.
Digital Communities (-18.3%)
With the gradual reopening of the global economy and people returning to the office, Digital Communities posted a disappointing performance in Q3. The Chinese tightening regulatory environment toward tech companies further amplified the negative sentiment toward large Chinese online communities. iQiyi and Bilibili, two major Chinese video streaming websites, both saw their prices drop by over 40% in Q3. Skillz was down primarily due to the economic reopening, which gives people more options to spend their time and money instead of playing mobile games, as well as the company’s excessive spending on marketing with little topline contribution, which disappointed the investors.
Distributed Ledger (-19.7%)
The battle between regulation and the market took place in Distributed Ledger as well. The People’s Bank of China and other regulators said all crypto-related transactions were illegal and must be banned. The statement put strong pressure on cryptocurrencies and their related stocks such as Riot Blockchain and Ebang International. OneConnect Financial Technology is another victim of Chinese technology collapsing.