Emerging Markets Daily - April 19
Investors Love Africa Debt, Mubadala Sees Promise in Tech and Asia Growth, Argentina Debt Reschedule, India's Razorplay Triples Valuation, U.S and Japan Partner on 6-G + Luxury Tilts to China
The Top 5 Emerging Markets Stories from Global Media - April 19
Why Investors Can’t Get Enough of Africa’s Debt
Quartz Africa
“A huge appetite for African eurobonds is spurring a wave of issuances in the continent.”
“Benin saw its ratings outlook improve after successful eurobond issuances in January. In February, Côte d’Ivoire raised $1.03 billion in a eurobond sale which saw investors place orders for triple the amount offered. (The sale was a reopening of a eurobond sale issued in November, Africa’s first during the Covid-19 pandemic.) Now, Kenya is planning to use the debt instrument to raise $1 billion by June, and Ghana and Nigeria are also preparing their own issues.”
“After a pandemic-induced lull in borrowing, governments and investors are feeling more confident about Africa’s prospects, in part, thanks to the billions of dollars worth of Covid-19 recovery help from the IMF and other multilateral lenders, says George Ogutu, head of research at Genghis Capital in Nairobi.” Carlos Mureithi reports
Mubadala Ramps Up Tech Investments, Sees India, China Growth
The Financial Times
”Abu Dhabi’s most active investment fund Mubadala is turning away from its roots as it cuts its holdings in energy and other commodity-related assets while ramping up investments in technology, healthcare and disruptive industries.”“Khaldoon al-Mubarak, chief executive, said the $232bn fund’s strategy shift would mean more selldowns in ‘legacy commodity sectors’ either through market listings or private placements, including an initial public offering for Emirates Global Aluminum.”
“Mubadala is also planning an IPO for Yahsat, a satellite company set up 14 years ago, and is considering whether to list GlobalFoundries, the US-based chipmaker into which it has pumped billions of dollars over the past decade, and which turned its first profit in 2019.”
“At the same time, the fund is increasing its investments in Asia’s two powerhouses as it aims to double its assets under management by 2030. ‘The sectors we like all have a significant growth trajectory in China and if you look at the overall portfolio and the percentage of coverage we have in China, it’s nowhere near where it should be,’ Mubarak told the Financial Times. ‘The same applies for India.’”
“Mubadala deployed more funds and ‘monetised’ more assets last year than the highs it hit in 2019, when it invested $18.5bn and raised $17bn through divestments, Mubarak said, adding that annual results in June would reveal higher income.”
“The shift in strategy reflects Abu Dhabi’s thinking as its leaders increasingly focus on developing tech-related hubs and industries rather than manufacturing. It also fits with the deepening economic ties between the United Arab Emirates and Asia.” Andrew England reports.
Argentina Seeks Paris Club Debt Reschedule
The Buenos Aires Times/Bloomberg
“Argentina is pressing the Paris Club to renegotiate debt with the South American country as separate talks to strike a deal with the International Monetary Fund drag on, La Nación reported, citing Economy Minister Martín Guzmán.”
“Guzmán said in the interview with the newspaper that Argentina was working to postpone or refinance upcoming debt payments with the group of wealthy countries to avoid ‘a shock that damages the economy at a time when it is recovering.’”
“Efforts to reach a deal with the Paris Club were complicated because of the group’s request for Argentina to first reach a deal with the IMF, Guzmán said. Argentina and its biggest creditors have begun ironing out possible revisions to the country’s US$65-billion debt restructuring proposal before crucial bond payments come due later this month.”
“The country is seeking to renegotiate US$45 billion of debt with the IMF, though Guzmán said he’s doubtful a deal would be reached by May even with the progress made. ‘It’s happening, but it may take time,’ he said.” The Buenos Aires Times reports.
India’s Razorpay Triples Valuation to $3 Billion With Funding
Bloomberg
“Razorpay, an Indian startup that facilitates digital payments, is raising $160 million from Sequoia India, Singapore’s sovereign fund GIC Pte and others, tripling its valuation to $3 billion in six months.”
“India is in the middle of an unprecedented startup boom, as the coronavirus pandemic drives more activity online and investors see untapped opportunity for profit in the fledgling digital ecosystem. Earlier this month, six startups turned unicorns within the span of days, almost as many as all of 2020. Razorpay is the latest beneficiary, seeing its valuation surge after reaching the $1 billion mark in October.” Saritha Rai reports
US and Japan to Invest $4.5bn in Next-Gen 6G Race with China
Nikkei Asia
“U.S. President Joe Biden and Japanese Prime Minister Yoshihide Suga have agreed to jointly invest $4.5 billion for the development of next-generation communication known as 6G, or ‘beyond 5G.’”
“As of now, Chinese companies such as Huawei Technologies and ZTE hold a roughly 40% share of base stations. European players Eriksson and Nokia, as well as South Korea's Samsung Electronics are the other heavyweights, together accounting for a 90% market share. American and Japanese enterprises lag behind.” Nikkei staff writers report
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What We’re Also Reading…
Indonesia Air Traffic Set to Get Back to Normal By….2026
Jakarta Post
“Indonesia’s domestic and international flight volume is projected to fully recover by 2026, mainly assuming outbreak containment goes as planned, according to a recent key study.”
“Domestic flight volume is expected to recover to pre-pandemic levels in 2024 while international volumes in 2026, according to the study conducted by Padjadjaran University (UNPAD) and commissioned by the Indonesia National Air Carrier Association (INACA).”
“UNPAD researchers explained on Thursday the projections assumed that Indonesia successfully completed its second phase vaccination program of 38.87 million citizens by March 2022 and that most of Asia, Europe and the United States optimized their vaccination programs by that same year, as per schedule.”
“‘Yes, the vaccine will be a game changer, but so will adopting health protocols and providing good health facilities in the airline industry. These will improve public trust and revive the airline industry,’ said lead researcher and UNPAD economic professor Yayan Satyakti on Thursday.” The Jakarta Post reports.
Luxury’s Centre of Gravity Tilts to China
Financial Times
“To boost domestic consumption, the Chinese government has turned [Hainan] island into a duty-free shopping hub. Visitors can indulge in fashion from Gucci and Prada, jewellery from Cartier, beauty products from Estée Lauder or premium whisky from The Macallan.”
“Hainan became even more popular when Covid-19 travel restrictions meant Chinese consumers, who have driven luxury sector growth in recent years, could no longer go on shopping trips to Paris, London, Milan or Hong Kong.”
“The island is a powerful symbol of how luxury’s centre of gravity is tilting towards China, mirroring the “repatriation” trend in earlier decades of Japanese shoppers who used to buy Louis Vuitton and Balenciaga abroad but now do so at home.” Edward White and Leila Abboud report
China’s Millennials, Gen Z Turn to Louis Vuitton Handbags, Art Toys and Japanese Whisky as Collector’s Items
South China Morning Post
“The tastes of wealthy Millennials and Generation Z members differ considerably from older generations, with a focus on items that reflect their modern culture.”
“Chinese auction houses are changing their auction catalogues, adding art toys and whisky and dropping items like rare tea preferred by older generations.” He Huifeng reports