"Stay at home" could well go down in history as the global motto of the year, as the coronavirus pandemic forced people to stay at home for the time being. This development had far-reaching effects not only on society: it had a massive impact on the economy at the same time. Whereas the restrictions brought business in many sectors to a de facto standstill, other industries experienced an absolute boom. Among those to profit in particular have been companies which help the millions "stuck at home" pass the time. That also and especially includes the gaming industry. The "stay at home" movement has enhanced the attraction of the already very popular video games still further. Less surprisingly, this trend also being felt on the stock market: at the end of November the Solactive® Electronic Gaming Index was trading at around one and half times the closing price in 2019 (see chart).
It has been possible to invest in this benchmark through a tracker certificate from Leonteq for just under three years. The experienced service provider Solactive is responsible for the selection, composition and calculation of the underlying stock. Only companies which achieve the majority of their sales in the electronic gaming segment are considered for inclusion. They may be console manufacturers just as much as producers of equipment such as controllers, keyboards or headsets. Developers and marketers of video games are also eligible. As usual, alongside the operating premises outlined above the shares must also meet some quantitative criteria. These include a market capitalisation of at least USDmn 100 and a primary listing on a regulated stock market. From the companies which make it through the selection process, Solactive adds the 20 with the highest market capitalisation to the index with an equal weighting. The selection is reviewed and adjusted where necessary twice a year, in May and November. Extraordinary changes may be made between these dates.
The Solactive® Index covers the whole spectrum of the growing electronic gaming market. To that extent the leading console manufacturers certainly deserve a place. With the PlayStation 5 and Xbox Series X|S, Sony and Microsoft have brought the next hardware generation onto the market right on time for this year's Christmas trade. According to a report from Bloomberg News, Nintendo is currently working on an upgrade for the Switch console together with a more extensive games palette. The Japanese group is said to have asked games developers to make their software compatible with a 4k resolution. The publishers themselves play a leading role in the index, which includes both specialists from Japan and leading US service providers. One of the leading games developers listed on the Nasdaq is Activision Blizzard. The group, which is responsible for the "Call of Duty" series, among others, tips the scales with a hefty USDbn 60 capitalisation at the moment. The stock market value of Electronic Arts comes to some USDbn 36. The Californian company created blockbusters such as the life simulator "Sims" and the racing classic "Need for Speed". In "Fifa", Electronic Arts also develops and distributes what is probably the best-known sports video game. 35 million users emulated their idols on the 2020 version, giving the product record sales figures.
It is not uncommon for controllers, mice or keyboards from Logitech to be included in the party. The Swiss-American group equips gamers with a large range of accessories. Logitech is present in many home offices, too, through headsets or cameras, for instance. This has led the company to experience particular demand during the coronavirus pandemic. Whether console manufacturers, games developers or mouse specialists, with Christmas business the gaming industry could have a very strong end to 2020. A few weeks before the festival, the Solactive® Electronic Gaming Index is trading only slightly below its all-time high. The tracker certificate gives investors the confidence of knowing that the selection will achieve a new "high score" over the short or long term. Alongside the price movement itself, they also share in the dividends, because distributions from the companies included in the underlying are reinvested net after tax. The tracker is optionally available in USD and CHF and comes with a management fee of 1.35% p.a. in each case.
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