Emerging Markets Daily - April 4
Asia IPO Boom Set to Slow, Brazil Banks Navigate Digital Disruptions, Jordan Faces Alleged Coup Attempt, Shenzhen Rising as Drone Capital, S. Korea Torn Between U.S, China
The Top 5 Emerging Markets Stories from Global Media - April 4
Record-Setting $49 Billion Asia IPO Boom Is Likely to Taper Off
Bloomberg
“As in the U.S., initial public offering activity out of Asia has had its strongest-ever start to a year. That frenzy for new shares is likely to taper off as demand falls back to earth in the next few months.”
“Asian companies, like their global peers, notched their best first quarter for listings ever, thanks to a flood of liquidity during the pandemic, super-low interest rates, and rallying stock markets. The firms raised $49.3 billion through first-time share sales at home and abroad -- a 154% jump over the same period in 2020, data compiled by Bloomberg show.”
“Asia’s IPO space faces an added challenge: the travails of Chinese tech firms, which dominate fundraising in the region. These companies are facing a crackdown against monopolistic practices at home and are also in focus as U.S.-China tensions keep rising. Last month, for instance, the U.S. moved forward with a law that could result in Chinese firms that don’t comply with U.S. auditing standards being kicked off American exchanges.” Julia Fioretti reports
Brazil’s Biggest Banks Battle for Reinvention in Digital Era
The Financial Times
“A small club of institutions dominates the high street in Latin America’s largest economy, long notorious for its costly banking fees and borrowing rates, with their fat margins often the source of public anger.”
“But as the oligopoly faces a trifecta of low interest rates, the economic impact of Covid-19 and digital upstarts snapping at their heels, lenders are under pressure like never before to accelerate reforms and provide better value for money to clients.”
“The five giants that tower over the country’s financial system — Itaú, Bradesco and Santander Brasil, along with state-controlled Banco do Brasil and Caixa Econômica Federal — have in recent years embarked on investments in technology in a bid to stop customers switching to challengers such as Nubank, Brazil’s internet banking unicorn.”
“Regulators are attempting to boost customer choice too: the central bank is rolling out an ‘open banking’ initiative, aimed at giving clients greater control over their data and boosting competition, and last November introduced an instant payment system that is free for individuals.” Michael Pooler reports
Jordan Arrests Officials, Detains Prince Hamzah in Alleged Coup Effort
The Wall Street Journal
“A schism in Jordan’s ruling royal family burst into the open on Saturday, with the reigning monarch’s younger brother saying he had been effectively placed under house arrest and state media reporting that senior officials had been detained as part of security investigations.”
“In a video broadcast on BBC, Prince Hamzah bin Hussein decried efforts to silence him and criticized the government of his brother, King Abdullah, an important U.S. ally, saying, ‘This country has become stymied in corruption, in nepotism and in misrule.’”
“The prince—who was removed as crown prince, a position that put him next in line for the throne, by King Abdullah in 2004—said a number of his friends had been arrested and that he was told not to leave his home. He said his security detail had been removed and his internet and phone lines cut.”
“More than 20 people have been taken into custody so far, mostly close allies of the prince, according to two senior Arab envoys based in Jordan and another person familiar with the matter. Jordan’s state-run Petra news agency quoted the head of the country’s military joint chiefs of staff as saying the people arrested were being held as part of ‘joint comprehensive investigations undertaken by the security forces.’”
“Jordanian authorities told diplomats that they were investigating a foreign-backed plot to destabilize the country, these people said. In his video, Prince Hamzah said there was no such plot. ‘More arrests are expected to follow,’ one of the diplomats said.” The Wall Street Journal reports.
How Shenzhen Became the Drone Capital of the World
South China Morning Post
“Shenzhen is home to more than 600 licensed commercial drone companies, out of a total of about 7,000 in mainland China.”
“Founded in 2006, DJI now accounts for about 80 per cent of the world’s commercial drone market.”
“As a testing ground for China’s market-oriented reforms, Shenzhen used to be infamous for its copycat culture and sweatshops. That has changed over the past two decades, as the city’s fortunes grew alongside the development of companies like telecommunications equipment makers Huawei Technologies Co and ZTE Corp, as well as internet giant Tencent Holdings, which operates the world’s biggest video gaming business by revenue and China’s multipurpose super app WeChat.”
“The global success of DJI, which makes eight of every 10 non-military drones flown around the world, has helped transform Shenzhen into an international hotspot for the UAV industry over the past 15 years, after Hong Kong-educated engineer Frank Wang Tao founded the company in the southern Chinese coastal city. Shenzhen is home to more than 600 licensed commercial UAV companies operating in mainland China, according to WUAVF data from 2019.” Masha Borak and Yujie Xue report
South Korea Stuck Between China, U.S in Diplomatic Row
Korea Times
“South Korea finds itself stuck in between the United States and China, with the two superpowers striving to tip the balance of Seoul's diplomacy in their own favor at two high-profile meetings in Annapolis and Xiamen over the weekend.”
“Washington is pressuring Seoul to show support by stressing the importance of their long-term security alliance, while Beijing is trying to leverage its influence over North Korea.”
“National Security Adviser Suh Hoon met his counterparts Jake Sullivan of the U.S. and Shigeru Kitamura of Japan on Friday (local time) at the U.S. Naval Academy in Maryland for talks on North Korea and the Indo-Pacific situation.”
”After the meeting, the White House issued a statement that the advisers not only shared ‘their concerns about North Korea's nuclear and ballistic missile programs’ but also discussed ‘common concerns including Indo-Pacific security,’ with the latter seen as a move against China…”“The U.S. has been sending signals to its Asian allies to bolster their alliances in the face of an assertive China, while South Korea has been pursuing ‘strategic ambiguity’ to maintain its relations with Beijing, which is Seoul's largest trading partner possessing a significant influence over North Korea…”
“The U.S. pressure appears to be growing on economic issues as well, as the trilateral meeting also discussed the global shortage of semiconductors, whose supply chain is heavily relying on producers in Asian countries…”
”The Biden administration has already set the semiconductor shortage in the global market as a matter of national security, with U.S. reports saying that Biden's national security and economic advisers plan to meet semiconductor and car companies on April 12. Bloomberg reported that South Korea's Samsung Electronics is among the chipmakers invited to the White House.” The Korea Times reports.