General Overview

Recent developments in various high-impact sectors continue to demonstrate how disruptive innovation is at the forefront of profound economic and societal shifts.

Amazon Web Services’ launch of new AI certifications aims to democratize access to advanced technological skills, addressing the pressing demand for expertise in artificial intelligence and machine learning. Meanwhile, the cyberattack on CDK Global underscores the vulnerabilities inherent in an increasingly digital economy, spotlighting the critical need for robust cybersecurity measures. The remarkable e-gaming growth across Asia and the MENA region highlights the expanding influence of digital entertainment, driven by demographic shifts and evolving consumer preferences. And Intel’s latest AI chip announcements at Computex showcase the relentless race for supremacy in the artificial intelligence arena, promising enhanced performance and cost efficiencies that could redefine industry standards.

Together, these developments highlight the transformative power of innovation across diverse sectors, shaping a future where technology continues to drive profound change.

Sector Specific Updates

Automobile Innovation

The European Union announced new tariffs on electric vehicles imported from China beginning in July. Tariffs on Chinese-made EVs will rise to as much as 48%, targeting major players such as BYD (held by the Fund), Geely, and SAIC, which owns the MG brand. The tariffs were imposed after a European Commission investigation accused Chinese subsidies for EVs of being “excessive” and “unfair.”

The tariffs will likely cut Chinese EV imports to Europe by a quarter, and Chinese EV prices in Europe could rise by 15% to 30%. Despite this, however, analysts believe these tariffs will merely slow, but not halt, China’s EV push into Europe, with some likening the measures to a “speeding ticket” for Chinese firms.¹

Cybersecurity

CDK Global, a leading software provider to North American car dealerships, faced a significant crisis in June as an Eastern European cybercrime group demanded a ransom in the tens of millions to end a disruptive ransomware attack that began June 19. The hackers have thrown around 15,000 dealerships into disarray, crippling sales, repairs, and deliveries in a North American industry worth $1.2 trillion in annual U.S. sales. The attack was timed to affect the industry amid an end-of-quarter sales push. Reports indicate that CDK was planning to pay the ransom.

The breach led to a complete shutdown of CDK’s core dealership management system (DMS), a suite of tools essential for dealership operations, causing widespread chaos and what has been described as a “disaster” for dealerships who rely on the DMS for all functionality, from sales to stocking vehicles. This incident underscores the high dependency of the auto retail sector on a few DMS providers, exacerbated by industry consolidation.²

Cloud Computing

Amazon Web Services (AWS) has launched two new certifications in artificial intelligence, machine learning, and generative AI—the AWS Certified AI Practitioner and AWS Certified Machine Learning Engineer – Associate—along with a suite of free and affordable training courses designed to equip professionals with the skills necessary to excel in the rapidly expanding cloud technology sector.

The AWS Certified AI Practitioner certification targets individuals from diverse backgrounds, enabling them to demonstrate their understanding of AI concepts, identify AI opportunities, and responsibly use AI tools. The AWS Certified Machine Learning Engineer – Associate certification is intended for those with at least a year of experience in building, deploying, and maintaining AI and ML solutions on AWS. This certification highlights the candidate’s ability to scale AI models for real-time use, optimize performance, and secure AI solutions.

The certifications aim to fill the expertise gap in deploying, maintaining, and monitoring AI models, a need highlighted by industry demand. AWS’s initiative aligns with its goal to provide free AI training to 2 million people around the world by 2025, offering a range of training resources through its AWS Skill Builder platform.³

E-Gaming

A new report from industry watchers Niko Partners found that the gaming market across Asia, the Middle East, and North Africa (MENA) surged to $85.5 billion in 2023, marking a 4.6% annual increase. This growth trajectory is projected to continue, with expectations for the region to reach $97.1 billion by 2028.

Niko Partners’ study covers key markets such as China, India, Japan, Korea, Southeast Asia, and MENA countries. Notably, India emerges as a focal point for future expansion, forecasted to add a staggering 277 million gamers by 2028, surpassing even China in total gamer numbers.

The dominance of mobile gaming in the region is clear, with 58% of players spending on mobile games in 2023 and half on PC game expenditures. By 2028, the report anticipates two billion players in Asia and MENA, up from 1.6 billion in 2023, reflecting a positive demographic shift in gaming participation.

Key drivers of this growth include localized content, increasing engagement from female gamers, government endorsements of esports, and the evolution of monetization strategies beyond in-app purchases in mobile games.⁴

Genomics

A recent trial involving over 3,500 participants with type 2 diabetes and chronic kidney disease revealed that semaglutide, the active ingredient in both drugs, significantly reduced the risk of kidney disease-related events by 24% while also slowing kidney function decline and reducing mortality risk. These promising results have prompted Novo Nordisk to seek FDA approval to expand Ozempic’s label to include chronic kidney disease treatment, potentially broadening its usage.⁵

The trial, published in the New England Journal of Medicine, suggests that Ozempic could address complex medical needs by treating both diabetes and CKD, potentially capturing a significant share of the projected $19.2 billion CKD market by 2030. The study’s long-term data supports the drug’s efficacy and tolerability, bolstering the likelihood of FDA approval for this new indication.⁶

Fintech

Mastercard has announced a major initiative to phase out manual card entry for online purchases by 2030, aiming to enhance the safety and accessibility of e-commerce. This move reflects the widespread adoption of contactless payments in physical stores and seeks to replicate that convenience digitally.

To achieve this goal, Mastercard will leverage tokenization, Click to Pay, and payment passkeys. The company plans to replace card numbers with secure tokens, streamline guest checkout integration for merchants and banks, and introduce biometric-powered payment passkeys to eliminate the need for passwords in online transactions.

Mastercard emphasized that the convergence of physical and digital experiences will offer faster, safer checkouts for consumers, boost sales, enhance fraud protection, and increase approval rates for merchants while providing issuers with improved customer security and top-of-wallet status.

The initiative is already gaining traction in Europe, where tokenization has been widely adopted. Valerie Nowak, EVP of product and innovation at Mastercard Europe, highlighted the reduced fraud rates and convenience as key benefits.⁷

Robotics & Automation

Intel introduced its latest AI chip, the Xeon 6, at the Computex tech conference in Taiwan. This move is part of Intel’s effort to regain market share from competitors Nvidia and AMD, who recently launched their own new AI chips. The Xeon 6 processors promise improved performance and energy efficiency for data centre workloads.

Intel has been trailing behind Nvidia and AMD in the AI chip market, but with these new chips, including the recently announced Gaudi 3 processor for AI model training and deployment, Intel aims to offer high-performance, cost-effective competition.

In addition to the Xeon 6, Intel revealed pricing details for its Gaudi 2 and Gaudi 3 AI accelerators, positioning them as more affordable alternatives to rival products. CEO Pat Gelsinger emphasized that customers seek choice and lower total cost of ownership (TCO) in AI training and inferencing solutions.⁸

5G

Global 5G mobile subscriptions are forecasted to reach nearly 5.6 billion by 2029, accounting for 60% of all mobile subscriptions, according to a recent report. This significant growth underscores the rapid adoption of 5G technology worldwide, with North America leading the charge, expected to achieve a 90% penetration rate by 2029. The Gulf Cooperation Council (GCC) countries and Western Europe are closely behind, projected to reach 89% and 86%, respectively.

As of Q1 2024, 160 million new 5G subscriptions were added, bringing the total to over 1.7 billion. The technology is on track to become the world’s dominant mobile access technology by 2028. The report highlights that nearly 300 service providers have launched commercial 5G services globally, with around 50 deploying standalone 5G networks. The expanding 5G infrastructure and growing demand for advanced mobile services continue to drive this robust adoption.

In Sub-Saharan Africa, 5G subscriptions are projected to exceed 320 million by 2029, representing 28% of the region’s mobile subscriptions. The Middle East and North Africa region is also poised for substantial growth, with 5G subscriptions expected to rise at an annual rate of 51%, reaching 750 million by 2029. By then, 5G will comprise the largest share of total subscriptions in the region at 50%.⁹

EDGE ETF: Investment in Innovation

The Evolve Innovation Index Fund (EDGE ETF) is an 8-in-1 innovation fund that invests in disruptive innovation themes across a broad range of industries, including: cloud computing, cybersecurity, egaming & esports, automobile innovation, 5G, fintech, genomics, and robotics & automation. For more information on EDGE ETF, visit our website at https://evolveetfs.com/edge/. Give your portfolio an EDGE.

Portfolio Strategy and Activity

For the month, Evolve Cloud Computing Index Fund made the largest contribution to the Fund, followed by Evolve Cyber Security Index Fund and Evolve E-Gaming Index ETF. The largest detractors to performance for the month were Evolve Automobile Innovation Index Fund, followed by Genmab A/S and PayPal Holdings Inc.

 

Sources

1. Nardelli, A., Valero, G., & Torsoli, A., “EU Tariffs on China EVs to Reach as High as 48% With New Levies,” Bloomberg, June 12, 2024; https://www.bloomberg.com/news/articles/2024-06-12/eu-to-impose-additional-tariffs-on-ev-imports-from-china
2. Trudell, C., “CDK Hackers Want Millions in Ransom to End Car Dealership Outage,” Bloomberg, June 21, 2024; https://www.bloomberg.com/news/articles/2024-06-21/cdk-hackers-want-millions-in-ransom-to-end-car-dealership-outage
3. “AWS debuts 2 AI certifications to give you an edge in pursuing in-demand cloud jobs,” Amazon.com, June 11, 2024; https://www.aboutamazon.com/news/aws/aws-certifications-generative-ai-machine-learning-cloud-jobs
4. McEvoy, S., “Asia and MENA games market expected to hit $100bn by 2028,” GamesIndustry.biz, June 6, 2024; https://www.gamesindustry.biz/asia-and-mena-games-market-expected-to-hit-100bn-by-2028
5. Jagielski, D., “Here’s Why Demand for Ozempic and Wegovy Could Soar Even Higher,” Yahoo Finance, June 8, 2024; https://finance.yahoo.com/news/heres-why-demand-ozempic-wegovy-130000199.html
6. Carchidi, A., “Ozempic Just Got Even More Bullish For Novo Nordisk Stock, Yet Again,” The Motley Fool, June 6, 2024; https://www.fool.com/investing/2024/06/06/ozempic-just-got-more-bullish-for-novo-nordisk/
7. Pathe, T., “Mastercard commits to phasing out manual card entry in e-commerce by 2030 with tokenisation, Click to Pay and payment passkeys,” FinTech Futures, June 12, 2024; https://www.fintechfutures.com/2024/06/mastercard-commits-to-phasing-out-manual-card-entry-in-e-commerce-by-2030-with-tokenisation-click-to-pay-and-payment-passkeys/
8. Chiang, S., “Intel unveils new AI chips as it seeks to reclaim market share from Nvidia and AMD,” CNBC, June 4, 2024; https://www.cnbc.com/2024/06/04/intel-unveils-new-ai-chips-as-it-seeks-to-take-on-nvidia-and-amd.html
9. “Ericsson Mobility Report June 2024,” Ericsson, n.d.; https://www.ericsson.com/en/reports-and-papers/mobility-report/reports/june-2024

Header image source: Getty Images Credit: Yuichiro Chino

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