Emerging Markets Daily - April 15
China Firms 'Eye-Popping' Growth, HSBC Hong Kong Shift, China Record Iran Oil Imports, Silver Lake Invests in UAE AI Firm, US To Brand Taiwan 'Currency Manipulator' + India, China By the Numbers
The Top 5 Emerging Markets Stories from Global Media - April 15
Goldman Expects Chinese Firms to Grow Profit at ‘Eye-Popping’ Pace
Bloomberg
“Chinese firms are set to report that net income surged by an ‘eye-popping’ rate of 55% in the first quarter thanks to the ongoing economic recovery, with cyclical firms leading gains, according to Goldman Sachs Group Inc.”
“Some firms within the cyclical sectors could report earnings doubling from depressed levels a year earlier, after commodity prices jumped and foreign demand rebounded, the Wall Street bank’s strategists including Kinger Lau wrote in a Thursday note. The so-called new China sectors, including technology shares, are estimated to see earnings rise by 48% year on year, they added.” Jeanny Yu reports
HSBC Relocates Top Leadership from London to Hong Kong
Financial Times
“HSBC will move four of its top executives to Hong Kong from London, one more than had been anticipated, as the bank continues to accelerate its strategic shift to Asia.”
“Relocating those four executives means that divisions that account for almost all of HSBC’s global revenue will be run out of Hong Kong. The decision also has symbolic importance considering the bank’s delicate geopolitical position, caught amid escalating tensions between the west and China as they face off over the future of Hong Kong.” Stephen Morris reports
China Record Imports of Discounted Iran Oil Squeezes Competitors
Hellenic Shipping News
“China’s record imports of Iranian crude in recent months has squeezed out supply from rival producers, forcing sellers of oil from countries such as Brazil, Angola and Russia to slash prices and divert shipments to India and Europe.”
“The jump in Iranian volumes took the market by surprise and has capped global oil prices although the Biden administration had been expected to resume talks with Tehran to revive a nuclear deal.”
“Iranian oil started to slip into China from late 2019 despite tough U.S. sanctions, but volumes began to surge only since late last year as oil rebounded above $60 and buyers were emboldened by the prospect of the United States lifting sanctions under President Joe Biden.”
“China received a daily average of 557,000 barrels of Iranian crude between November and March, or roughly 5% of total imports by the world’s biggest importer, according to Refinitiv Oil Research, returning to levels before former U.S. President Donald Trump re-imposed sanctions on Iran in 2019.”
“Most of these oil ended up in the eastern province of Shandong, China’s hub for independent refiners. ‘These sensitive barrels are hammering supplies from everywhere, as they are simply too cheap,' said a Chinese trader who handles oil sales to Shandong, referring to Iranian oil which was sold $6-$7 a barrel below that from Brazil earlier this year.”
“A second trader said suppliers from South America to West Africa and North Sea are boosting efforts to find new markets as Chinese demand plummeted.” Hellenic Shipping News reports.
Silver Lake Invests $800 Million in UAE AI, Cloud Computing Firm
The Wall Street Journal
“Silver Lake is investing in Abu Dhabi technology company Group 42, in a sign of the private-equity firm’s deepening relationship with the emirate, the companies said Wednesday. The firm is investing about $800 million for a minority stake, according to people familiar with the matter.”
“G42, as the company is known, offers artificial-intelligence and cloud-computing products aimed at digitizing enterprises across Abu Dhabi’s economy, and increasingly in other parts of the Middle East. Its shareholders include Chairman Sheikh Tahnoun bin Zayed Al Nahyan, the brother of Abu Dhabi’s crown prince, and Abu Dhabi sovereign-wealth fund Mubadala Investment Co.”
“Silver Lake will be G42’s first Western investor and the buyout firm’s co-chief executive, Egon Durban, will join its board. G42’s valuation couldn’t be learned, but its four largest segments—data platforms, cloud, healthcare and smart city—each had hundreds of millions of dollars in annual revenue, and the business is growing at a rapid clip, the people familiar with the matter said.”
“With more than $79 billion in combined assets under management and committed capital, Silver Lake has a longstanding strategy of taking big stakes in technology companies and working closely with their founders or management to help spur growth. It has been one of the most active investors during the pandemic, taking stakes in Airbnb Inc., Expedia GroupInc., Jio Platforms Ltd. and Klarna Holding AB, to name a few.”
“Led by Chief Executive Peng Xiao, a Chinese-American technology executive who also sits on the company’s board, G42 is a unique beast—a private company that is single-handedly aiding the digital transformation of the Abu Dhabi economy with the blessing of its government.” Miriam Gottfried reports.
US to Brand Taiwan as Currency Manipulator Even as Ties Warm
Nikkei Asia
“Growing U.S. support for Taiwan as part of a geopolitical battle with China is not deterring Washington from branding the island as currency manipulator. Taiwan's addition to the U.S. Treasury Department's list of manipulators in its semi-annual foreign exchange report, expected to be published on Thursday, ‘appears to be consensus now,’ according to Francesco Pesole, a forex strategist with Dutch financial services firm ING Group.”
“In a note Wednesday, ING estimated the Taiwanese central bank's foreign exchange interventions in 2020 amounted to 5.8% of gross domestic product -- way above the 2% threshold set by the U.S. Treasury. ‘We thought the Treasury already gave a free pass -- by underestimating [forex] interventions -- to Taiwan in December, possibly due to geopolitical considerations related to China's influence in the region,’ Pesole wrote, referring to the last report released by former President Donald Trump's administration.”
“The Taiwan dollar gained 5.6% against the greenback in 2020. But the island's currency fell sharply this week on expectations that it will be branded a manipulator -- falling more than 2% from a peak in early March. China, despite the trade, tech and geopolitical tensions with the U.S., is set to be spared.”
"‘China is not manipulating its currency so I expect that to be reflected in the report,’ said David Dollar, a former Treasury official who is now a senior fellow in the John L. Thornton China Center at the Washington think tank Brookings Institution.” Alex Fang reports
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China, India Population Size: By the Numbers
China has been the world’s most populous country for at least a quarter of a millennium. Back in 1750, China had a population of 225 million, or 28% of the world’s population, according to Our World in Data. By the year 2026, India may finally end China’s reign as the world’s most populous country.
To get a sense of how large both countries are, it might be helpful to compare individual states and provinces with the populations of entire countries. Emerging World’s research team has compiled the numbers below:
Top Ten States in India in 2020 by Population (and Country Comparisons)
Uttar Pradesh: 237,882,725 (The Philippines PLUS Egypt)
Bihar: 124,799,926 (Japan)
Maharashtra: 123,144,223 (Argentina PLUS Algeria PLUS Saudi Arabia)
West Bengal: 99,609,303 (Vietnam)
Madhya Pradesh: 85,358,965 (Iran)
Rajasthan: 81,032,689 (Germany)
Tamil Nadu: 77,841,267 (Italy PLUS Romania)
Karnataka: 67,562,686 (France)
Gujarat: 63,872,399 (Malaysia PLUS Angola)
Andhra Pradesh: 53,903,393 (South Korea)
Top Ten Provinces in China in 2020 by Population (and Country Comparisons)
Guangdong: 115.2 million (Ethiopia)
Shandong: 100.7 million (The Philippines)
Henan: 96.4 million (Vietnam)
Sichuan: 83.8 million (Turkey)
Jiangsu: 80.7 million (Canada PLUS Iraq)
Hebei: 75.9 million (Colombia PLUS Cameroon)
Hunan: 69.2 million (France)
Anhui: 63.7 million (Thailand)
Hubei: 59.3 million (South Africa)
Zhejiang: 58.5 million (Italy)
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