Emerging Markets Daily - February 13
Aramco 4% Stake Goes to Wealth Fund, India's Looming Mega IPO, Biden Talks Tough on Ukraine, Marcos-Duterte Phillippine Poll Lead, Tunisia IMF Loan in Trouble
The Top 5 Stories Shaping Emerging Markets From Global Media - February 13
Saudi Arabia Transfers 4% of Aramco Shares to Wealth Fund
The National
“Saudi Arabia's Crown Prince Mohammad bin Salman said 4 per cent of oil giant Saudi Aramco's shares have been transferred to country's sovereign wealth fund, known as the Public Investment Fund, to support restructuring the economy.”
“The move is also part of PIF's plan to raise its assets under management to 4 trillion Saudi riyals ($1.07tn) by 2025, according to the state-run Saudi Press Agency (SPA). The state remains the largest shareholder in Saudi Aramco after the transfer as it still owns more than 94 per cent of the company's shares, SPA said, citing the crown prince who is also chairman of the sovereign wealth fund.”
“…Last week, Moody's Investors Service assigned its fifth-highest investment grade rating to the sovereign wealth fund in its first rating of the government-owned entity. The agency assigned the fund an A1 long-term issuer rating, an A1 baseline credit assessment (BCA) and a ‘stable’ outlook on all ratings.”
“Saudi Aramco, the biggest oil company globally, completed the world's largest initial public offering in 2019, raising $25.6bn, and later sold more shares boosting the total to $29.4bn.”
“The sovereign wealth fund is a central plank of Saudi Arabia's Vision 2030 plan that seeks to diversify the Arab world's largest economy and reduce its reliance on oil. Under a five-year strategy that was announced in January of last year, the fund aims to more than double the value of its assets under management to $1.07tn, commit $40bn annually to develop the domestic economy until 2025 and help create 1.8 million jobs. It will contribute $320bn to the kingdom's non-oil economy.”
“Some of the companies established by the fund include the futuristic city known as Neom, the Red Sea Development Company, Qiddiya, the KAFD Development and Management company, SAMI, the Saudi Jordanian Investment Fund, Jeddah New Downtown Company, Saudi Entertainment Venture, Saudi Information Technology Company and National Energy Services.
“The fund nearly tripled its holdings of US stocks to more than $43bn in the third quarter of last year, investing in a variety of companies from e-commerce and FinTech to biotechnology and fuel cell-powered commercial vehicles.”
“The Public Investment Fund increased its investments in US equities from about $15.94bn in the second quarter of last year. Its US investments include electric car company Lucid, which went public last July and in which the fund has a 63 per cent stake.” Deena Kamel and Massoud Derhally report.
India Seeks to Sell 5% of Stake in Top Insurer’s Mega IPO
Bloomberg
“Prime Minister Narendra Modi’s government plans to sell a 5% stake in the initial public offering of state-run Life Insurance Corporation of India, in what’s set to be the country’s largest sale.”
“The administration will sell about 316 million shares in the wholly owned insurer, according to a draft prospectus filed with the market regulator Sunday. LIC’s so-called embedded value, a key metric for insurers that combines the current value of future profits with the net value of assets, is pegged at 5.4 trillion rupees ($72 billion).”
“India wants to complete the mega-IPO by the end of the financial year in March to help bridge a gaping budget deficit. The sale, touted as India’s Aramco moment in reference to the Gulf oil giant’s $29.4 billion listing, will test the depth of India’s capital markets. It will also evaluate global appetite for what some consider the state’s crown jewel while others question the autonomy of an institution regularly pressed into service to rescue teetering banks and public sector companies.”
“LIC is a household name in India. With 2,000 branches, more than 100,000 employees and about 286 million policies, the Mumbai-headquartered company reaches practically every corner of the country. The 65-year-old firm has nearly $530 billion in assets and 250 million policy holders and makes up almost two-third of the market.”
“The operator of digital payments app Paytm currently holds the record for the nation’s biggest IPO after raising $2.5 billion in a November listing.” Suvashree Gosh reports.
Biden Says US Will Respond “Swiftly and Decisively” to Russia Attack on Ukraine
CNN
“President Joe Biden told Ukrainian President Volodymyr Zelensky in a roughly hour-long call Sunday that the US would respond ‘swiftly and decisively’ if Russia takes further steps toward invasion, according to a White House readout of the call.”
“The call came amid US warnings that a Russian invasion of Ukraine could happen as soon as this week. ‘President Biden made clear that the United States would respond swiftly and decisively, together with its Allies and partners, to any further Russian aggression against Ukraine. The two leaders agreed on the importance of continuing to pursue diplomacy and deterrence in response to Russia's military build-up on Ukraine's borders,’ according to the White House readout.”
“A senior Ukrainian official said Zelensky renewed calls for Washington to provide greater military and financial support to Ukraine and asked for Biden to visit Ukraine as soon as possible. US officials said a trip by Biden to Ukraine is extremely unlikely”
“Zelensky also emphasized to Biden the need for a significant financial package for Ukraine, according to the official. The official told CNN the Ukrainian leader stressed to his US counterpart that strong economic support would -- in the words of the official -- ‘show Putin that the West stands with Ukraine, and that the impact of Putin's escalation would bear no fruit.’” CNN reports.
Marcos-Duterte Alliance Stretches Poll Lead in Upcoming Philippine Election
Nikkei Asia
“Ferdinand Marcos Jr, son of the late Philippine dictator of the same name, and the daughter of President Rodrigo Duterte widened their lead in the latest opinion polls for president and vice president, respectively.”
“Marcos's score surged to 60% in a Jan. 19 to 24 survey by independent polling agency Pulse Asia, rising from 53% in December. Davao Mayor Sara Duterte's score increased to 50% from 45% in the poll for vice president.”
“The strong poll result puts them in pole position for the May 9 elections that will test the Filipinos' appetite for change as well as the continuing influence of two of the political dynasties that have dominated the Southeast Asian nation's politics in the past half century.”
“If Marcos wins, it will be a remarkable political triumph for the family after his father's ouster in the 1986 People Power revolution following two decades in power.”
“The two presidential children were both seen as presidential contenders last year, but Sara Duterte eventually opted to seek the vice presidency and team up with Marcos.” Cliff Venzon reports.
Political Chaos Threatens Tunisia IMF Loan
African Business
“Protests continued to rock the Tunisian capital Tunis…as citizens joined a rally held by judges against President’s Kais Saied’s recent decision to dissolve the Supreme Judicial Council (CSM).”
“On Sunday, the President attempted to abolish the CSM, which is tasked with ensuring judicial independence, accusing the institution of siding with his rivals, the Islamist-inspired Ennahda party, on politically sensitive investigations.”
“…In July, Tunisia’s president fired his long-time rival, Prime Minister Hichem Mechichi, and suspended the government as public frustration with the country’s worsening economy and handling of the pandemic boiled over.”
“While critics slammed the move as a coup, it raised hopes that Tunisia’s new government could unlock the political stalemate and pave the way to recovery and investment.”
“But recent events could hamper the country’s chances of shoring up its financial crisis with a much-needed IMF bailout, analysts say. A 30-day state of emergency has turned into 18 months, while the CSM was one of the state’s last bodies acting independently of the government.” Shoshana Kedem reports.
The greatest glory in living lies not in never falling, but in rising every time we fall. -Nelson Mandela