Emerging Markets Daily - February 17
Hong Kong Stock Volumes Soar Past London, Baidu Ventures into EV and AI, China Eclipses US as #1 EU Trade Partner, Qatar LNG Ambitions, Dollar vs Euro EM Carry Trade
The Top 5 Emerging Markets Stories - February 17
Hong Kong Stock Trading Volumes Now 4x London Trading
“Stock trading volumes in Hong Kong have soared to four times those on London’s main exchange, as large technology stocks attracted soaring appetite from foreign investors for the ‘Nasdaq of Asia.’”
“Trading volumes in Hong Kong also reached almost 60 per cent of the New York Stock Exchange as investors, mostly from China, poured about $50bn into shares listed in the Asia finance hub this year.”
“Average daily turnover on the former British colony’s stock exchange in the 30 days to February 16 jumped to about $25bn, according to Financial Times calculations based on Bloomberg data, compared with about $10bn in the same period a year ago.”
“That is more than quadruple the average daily turnover on the London Stock Exchange during the same period. Earlier this month, London lost its crown as Europe’s biggest share trading centre to Amsterdam. The NYSE’s average daily turnover was $44bn.” Financial Times reports
Baidu Rallies As Advertising Returns, Eyes EV and AI for New Surge
“For two decades, Baidu Inc. has largely been viewed as an online marketing company selling ads within its web search results. Now, the internet company is ready to make the case that it has more to offer.”
“Shares of China’s largest search engine firm have surged nearly threefold since their mid-March lows, when the worst of the Covid-19 pandemic forced marketers and brands to tighten their budgets. Since then, advertising has staged a recovery, while Baidu’s years of investments in artificial intelligence is starting to bear fruit as it monetizes the technology in electric vehicles and smart speakers. The rally has emboldened the 21-year-old company to tap capital markets with a slew of financing plans, including a potential second listing in Hong Kong.”
”Executives unfurling earnings after trading hours on Wednesday will seek to reassure investors that the $80 billion gain in its market value has legs. Revenue for the December quarter is projected to surge 4.1%, the fastest pace in 2020, according to analysts’ estimates.”“‘AI was popular a couple of years ago, however it has been quiet as the application in real world is not easy,’ said Tian X Hou, founder of research firm TH Capital, in a note. ‘Once these applications come out one by one and are monetized in a bigger scale, Baidu is likely to enjoy multiple expansion.’” Bloomberg reports
China Eclipses US as EU's Largest Trading Partner
“China is now the EU's biggest trading partner, overtaking the US in 2020. China bucked a wider trend, as trade with most of Europe's major partners dipped due to the Covid-19 pandemic.”
“Trade between China and the EU was worth $709bn (€586bn, £511bn) last year, compared with $671bn worth of imports and exports from the US. Although China's economy cratered in the first quarter due to the pandemic, its economic recovery later in the year fuelled demand for EU goods.”
“China was the only major global economy to see growth in 2020, stoking demand for European cars and luxury goods.Meanwhile, China's exports to Europe benefited from strong demand for medical equipment and electronics.” BBC reports
Qatar Lays Out Ambition to Be LNG King for Next 20 Years
“Qatar aims to be the world’s biggest producer of liquefied natural gas for at least the next two decades, capitalizing on rising demand as the world transitions from oil and coal to cleaner energy.”
“Qatar will spend billions of dollars expanding its LNG capacity more than 50% to 126 million tons a year. That’s a level other countries will struggle to match, Energy Minister Saad Al-Kaabi said in an interview with Bloomberg Television.”
“‘Renewables will definitely happen -- we’re doing a lot ourselves -- but you need gas to complement that,” [Al-Kaabi] said. “Gas is sort of in a Catholic marriage with renewables. They would need to stay together for a very long time for you to have the transition successfully.’” Bloomberg reports
Dollar vs Euro in EM Carry Trades
“Weakness in both the dollar and euro is posing a dilemma for investors about which is the best source of funding for emerging-market carry trades. On balance, the US currency is still first choice.”
“The dollar has been sliding since the second quarter of 2020, as the Federal Reserve cut interest rates to a record low and spiralling coronavirus infections pummelled the United States economy. The euro has begun a swoon of its own in recent weeks, briefly dropping below the key US$1.20 level, as delays in coronavirus vaccinations set back expectations for a European economic recovery.”
“Both the dollar and euro have been losing ground versus their developing nation peers. The US currency has declined versus 17 of 22 emerging-market currencies in the past six months, while the euro has dropped against 16 of the same group this year.” South China Morning Post reports
