Emerging Markets Daily - April 12
WTO Cuts Trade Outlook, Indonesia's GoTo IPO Surges, China Urges Share Buy Backs, Mexico Prez Declares Referendum Victory, NuBank Expanding in Lat-Am
The Top 5 Stories Shaping Emerging Markets from Global Media - April 12
WTO Cuts World Trade Outlook, Though Goods Trade Will Still Grow 3%
Bloomberg
“Russia’s war with Ukraine will slow the world economy’s nascent rebound from the pandemic, reduce goods trade and potentially lead to a broader splintering of global commerce, the World Trade Organization said.
“The Geneva-based trade body lowered its projection for growth in merchandise trade this year to 3%, down from its previous projection of 4.7%. The WTO also said Tuesday it expects trade growth of 3.4% in 2023 and cited a number of downside risks to its assessment, including food insecurity and a possible resurgence of the virus.”
“‘History teaches us that dividing the world economy into rival blocs and turning our backs on the poorest countries leads neither to prosperity nor to peace,’ WTO Director-General Ngozi Okonjo-Iweala said. WTO expects world gross domestic product to expand by 2.8% this year, down 1.3 percentage points from the previous forecast of 4.1%. GDP growth should pick up to 3.2% in 2023, close to the average rate of 3% in the decade before the pandemic, the WTO said.” Bruce Baschuk reports.
Indonesia’s GoTo IPO Surges on Debut
Wall Street Journal
“Shares of Indonesia-based GoTo Group jumped in their public trading debut Monday, catapulting the ride-hailing, e-commerce and financial services company into the ranks of the country’s most valuable stocks.”
“GoTo soared as much as 23% above its initial public offering price in early trading on the Indonesia Stock Exchange. Shares closed 13% higher, giving the company a market capitalization equivalent to more than $30 billion.”
“The Jakarta-based company, whose formal name is PT GoTo Gojek Tokopedia Tbk, said it raised the equivalent of $1.1 billion in the offering, which drew around 300,000 investors. The retail portion of the deal was oversubscribed by more than 15 times, Chief Executive Andre Soelistyo said during a press briefing Monday.”
“GoTo’s IPO represents one of the world’s largest listing debuts so far this year, and took place despite chopp Obrador Declares Victory in Recall Referendum
China Securities Watchdog Urges Firms to Buy Back Shares Amid Sluggish Market
South China Morning Post
“China’s securities watchdog wants listed companies to repurchase their own shares and their major shareholders to support stock prices amid efforts by Beijing to stabilise the country’s sluggish stock markets.”
“The China Securities Regulatory Commission (CSRC) encouraged company boards to repurchase shares and create stock incentives and ownership plans for employees to shore up sentiment, according to a statement issued late on Monday. The regulator indicated it will also look at stock and bond issue plans favourably to help fund buy-backs.”
“The statement was released jointly with state assets supervisor State-owned Assets Supervision and Administration Commission of the State Council and the All-China Federation of Industry and Commerce, a chamber of commerce that helps the central government manage China’s private sector.”
“‘[The CSRC] encourages major shareholders, directors, supervisors and executives to hold listed companies’ shares for the long term, and to stabilise stock prices actively by increasing stakes when their companies’ stocks experience big drops,’ the commission said.”
“The commission has sought such intervention before as well. Last month, it asked publicly traded companies to buy back their own shares and money managers to invest in their own funds. In Monday’s statement, the CSRC also encouraged major shareholders, supervisors and executives to step in and buy stocks to uphold prices. It also specified the role it wanted entities such as social security funds to play, and listed the specific directions that it would work on.” Iris Ouyang reports.
Mexico President Declares Victory in Referendum. Opposition Calls it a Farce.
Financial Times
“Mexico’s president claimed victory on Monday in a polarising recall referendum with low turnout that was boycotted by much of the opposition. President Andrés Manuel López Obrador won almost 92 per cent of the vote, according to electoral body INE, with 99 per cent of votes counted.”
“Voter turnout for the ballot, which asked whether López Obrador should see out the remainder of his six-year term, reached just 18 per cent. That is well short of the 40 per cent needed for the result to be binding, but López Obrador said Monday he was happy with the result and would seek to lower the minimum turnout in the future.”
“…But critics and the opposition said the ballot was an $80mn farce designed to boost the president’s popularity….Many voters, however, remain loyal to the president, whom they see as a rare, incorruptible politician who spends time in small towns meeting regular people.” Christine Murray reports.
Latin America’s Most Valuable Fintech To Expand in Mexico and Colombia
Latin America Business Stories (LABS)
“Brazil‘s Nubank, Latin America’s most valuable fintech, is fueling its expansion in Mexico and Colombia with the investment of a $650 million line of credit.”
“The new funds are a three-year credit line in Mexican and Colombian pesos, financed by Morgan Stanley, Citigroup, Goldman Sachs, and HSBC, institutions that were underwriters of Nubank’s initial public offering (IPO) in December 2021.”
“Backed by Warren Buffett‘s Berkshire Hathaway, Nubank said the funding will go towards technology and product development, customer-base growth and hiring.”
“By the end of 2021, the company already had 1.4 million customers in Mexico, representing a 1,243% growth year over year, and became one of the largest credit card issuers in the country. Velez previously told that Nubank is preparing to launch checking accounts in Mexico this year, after it received regulatory approval for its acquisition of local lender Akala.”
“In Colombia, with only 11 months since the first card was delivered, Nu already had 114,000 customers, which represents a growth of almost 3x in the final quarter of the year…Nubank’s presence in Brazil, where it offers clients services including credit cards, savings accounts, investments, insurance and personal loans, gives an ‘interesting idea’ of where the firm is headed in Mexico and Colombia in the next five to 10 years, Velez said without offering more details.” LABS reports.
"You will face many defeats in life, but never let yourself be defeated." -Maya Angelou