Emerging Markets Daily - April 7
Shanghai Lockdown Test for Xi, Commodities Have More Upside: JP Morgan, VinFast's US IPO Looms, Hungary Says 'Yes' to Rubles Payment, JD.Com CEO Steps Down
The Top 5 Stories Shaping Emerging Markets from Global Media - April 7
Shanghai Lockdown Major Test of Xi’s Tenure as Nerves Fray and Residents Protest
Bloomberg
“Pets beaten to death. Parents forced to separate from their children. Elderly folks unable to access medical care. Locked-up residents chanting ‘we want to eat’ and ‘we want freedom.’”
“As much of the world moves on from the pandemic, the desperate scenes seeping out of China’s most global city have shocked even citizens who were once staunch supporters of President Xi Jinping’s Covid Zero strategy to eliminate the virus. The struggle to obtain daily necessities like food and medical care in Shanghai has triggered rare pushback from residents, with some saying the Communist Party’s cure is worse than the disease.”
“‘In this country it’s not the virus that scares us, but the chaotic anti-Covid measures that have caused risks to the well-being of the elderly, the children and companion animals,’ said Lily Chen, who lives in Shanghai with her three cats. ‘I now realize we can only rely on ourselves -- not the government -- to protect our own families.’”
“…The growing angst risks becoming one of the biggest challenges to Xi perhaps since he took power in 2012, and comes just months before he’s expected to secure a precedent-breaking third term at a twice-a-decade party congress later this year. The outbreak has virtually paralyzed one of China’s most sophisticated and recognizable cities, with businesses shuttered and factories of companies like Tesla Inc. halting production.”
“Although the Communist Party remains firmly in control, the rare grassroots criticism undercuts Xi’s ability to trumpet his Covid-19 strategy as evidence of China’s superior model of governance -- a key justification for him to stay in power. China’s Foreign Ministry has regularly blasted the U.S. and Europe for allowing so many deaths, while saying Xi’s policy was ‘beyond reproach.’” Bloomberg reports.
Already Booming Commodities Could See Another 40% Upside, JP Morgan Says
Markets Insider
“Commodity prices could continue their surge higher following Russia's invasion of Ukraine as investors start to take the asset class more seriously, according to a Wednesday note from JPMorgan.”
“Oil prices have already jumped 33% year-to-date, while natural gas, wheat, and copper prices have leapt 65%, 33%, and 7%, respectively.”
“The spike in commodities has been fueled by both increased demand from consumers who are showing strength in spending in a post-pandemic world, and a lack of supplies as Russia gets hit with sanctions from Western countries. Russia is responsible for upwards of 10% of global energy production and about 20% in global wheat production.”
“The bank highlighted oil, metals excluding gold, and agricultural products that could see another 30% to 40% upside from current levels. And while investors have increased their allocation to commodity assets over the past year, they're far from overweighting them in their portfolios. Markets Insider reports.
Vietnam Automaker VinFast Files for IPO in the U.S. Prez Biden Tweets Support
Nikkei Asia
“VinFast, the automobile unit of Vietnam's biggest conglomerate, has registered for an initial public offering in the U.S., where its plans for aggressive investment have earned a tweet of kudos from President Joe Biden.”
“The IPO filing to the Securities and Exchange Commission announced Thursday could put the Vingroup subsidiary on track to list shares by the end of the year. The size of the IPO is unclear, though earlier reports have said such an offering could raise up to $3 billion.”
If successful, it would be the first major listing in the U.S. for a Vietnamese company. ‘The size and price range for the proposed offering have yet to be determined,’ the business, founded by Pham Nhat Vuong, Vietnam's richest man, said in a post on its website.”
“VinFast signed a preliminary deal last week in North Carolina to invest $2 billion to build a factory for producing electric cars, buses and batteries. Biden called the investment a win in his aim to attract clean manufacturing businesses, many of which have migrated to Vietnam.”
“Construction of the North Carolina factory should begin this year and is expected to finish by July 2024. The plant's initial capacity will be 150,000 units per year, VinFast has said. The company has begun taking preorders globally for two electric sport utility vehicles with a goal to begin delivering them in the fourth quarter.” Nikkei Asia reports.
Hungary Breaks with EU, Says Will Pay for Russian Gas in Rubles If Required
Asharq Al-Awsat
“Hungary said on Wednesday it was prepared to pay roubles for Russian gas, breaking ranks with the European Union which has sought a united front in opposing Moscow's demand for payment in the currency.”
“Hungary will pay for shipments in roubles if Russia asks it to, Prime Minister Viktor Orban told a news conference on Wednesday in reply to a Reuters question.”
“Russian President Vladimir Putin has warned Europe it risks having gas supplies cut unless it pays in roubles as he seeks retaliation over Western sanctions for Moscow's invasion of Ukraine.”
“With weeks go to before bills are due, the European Commission has said that those with contracts requiring payment in euros or dollars should stick to that.”
“Hungary's Foreign Minister Peter Szijjarto earlier said that EU authorities had ‘no role’ to play in its gas supply deal with Russia, which was based on a bilateral contract between units of Hungarian state-owned MVM and of Gazprom.”
“The European Commission does not comment on declarations from national authorities, a spokesperson said. Hungary has been one of a few EU member states that have rejected energy sanctions against Moscow in response to the invasion, which Russia terms a ‘special military operation’.”
“Orban, whose government has pursued close business relations with Moscow for over a decade, swept to power for a fourth consecutive term in elections on Sunday, partly on a pledge to preserve security of gas supply for Hungarian households.” Asharq Al-Awsat reports.
JD.Com Founder Steps Down, Marking Latest China Tech Tycoon to Exit Scene
Financial Times
”Richard Liu has stepped down as chief executive of JD.com, the Chinese ecommerce group he founded more than two decades ago, marking the latest exit for one of the country’s top entrepreneurs.”
“Beijing’s months-long campaign to rein in Big Tech has spurred several Chinese entrepreneurs to flee executive roles in favour of working from behind the scenes, as private business in the country comes under greater regulator scrutiny.”
“ByteDance founder Zhang Yiming shed his formal titles last year, while the chief executive of its main Chinese rival, Kuaishou, also moved to lower his profile. At JD’s ecommerce rival Pinduoduo, founder Colin Huang left all of his executive roles at the company and the head of Jack Ma’s fintech upstart Ant Group resigned.”
“…Liu plans to stay on as chair and is JD’s controlling shareholder, holding a separate class of shares that gives him about 77 per cent of the total voting power of the company….Liu’s tenure at JD was marred by his 2018 arrest in Minnesota on allegations of sexual assault, which he denied. No charges were brought against him by US prosecutors.” The FT reports.
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