Emerging Markets Daily - February 18
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Emerging Markets Daily - February 18
Meituan Falls on China Crackdown, AirAsia CEO to Politicians: 'Be Brave', Top UAE Firm Eyes Saudi and Egypt, Samsung's Green Push, Vietnam: Major Gold Market
The Top 5 Stories Shaping Emerging Markets from Global Media - February 18
Chinese Tech Group Meituan Sheds $26B in Value on Regulatory Crackdown
Financial Times
“Chinese food delivery giant Meituan shed $26bn in value on Friday after regulators said they would push to lower the fees food platforms can charge restaurants for delivery.”
“China’s latest crackdown comes amid a flurry of government restrictions added to the country’s tech sector over the past year, which have mainly been aimed at reining in the country’s high-flying consumer tech companies.”
“…The guidelines immediately sent Meituan’s Hong Kong shares tumbling, down 15 per cent for the day, while shares of Alibaba, which controls its main rival Ele.me, shed 2.9 per cent. Hong Kong’s Hang Seng Tech index lost 3 per cent.”
“Meituan controls about 70 per cent of China’s food delivery market and the segment contributed more than half of its revenue in the third quarter of last year.”
“China’s antitrust regulators last year fined Meituan Rmb3.4bn ($537mn) for abusing its market position and demanded the company make a number of changes to its operations, including better treatment of its delivery riders who zip meals across cities.” Ryan McMorrow reports.
For more on the motorbike deliver driver as a symbol of our times, see the Emerging World column
AirAsia CEO Calls on Governments to be “Brave” and Begin Opening
BBC
“The boss of one of Asia's biggest airlines has called on governments in the region to open their borders for the sake of people's livelihoods. ‘Politicians have to be brave,’ AirAsia founder Tony Fernandes told the BBC.”
“Cross-border tourism, which accounted for 12% of South East Asia's GDP in 2019, was hit hard by Covid-19 rules. He was speaking at the Singapore Airshow, which returned this week to the city-state after two years of tough travel restrictions.”
"‘It's time to take a deep breath and assess the facts... Having borders closed isn't logical anymore because Omicron is in society,’ the Malaysian low-cost carrier's chief executive said. ‘Now we have to protect people's livelihoods and economies,’ he added.”
“Like most airlines around the world, AirAsia reported a massive loss in 2020. But while low-cost international carriers in Europe and North America enjoyed a rebound in 2021 as travel rules were relaxed, Asian airlines slumped even further.”
“According to the International Air Transport Association (IATA), Asia-Pacific was the only region in the world that failed to register any significant improvement in air traffic by the end of 2021.”
“He added:…'People will always need to fly. At the moment people are desperate to spend a weekend in Phuket or Langkawi or wherever. When borders fully open, there's going to be a lot of 'revenge travel'. I believe this is the beginning of the end. I'm aware I've said that a few times before, but I do believe we're on the road to recovery." Nick Marsh reports.
Top UAE Firm Eyes Growth Investments in Saudi Arabia and Egypt
Bloomberg
“Alpha Dhabi Holding PJSC, the third-largest public firm in the United Arab Emirates, is looking at opportunities in Saudi Arabia and Egypt, according to its chief executive officer.”
“Both markets are ‘promising,’ Hamad Al-Ameri said. Egypt is a huge market which can absorb more deals while Saudi Arabia has ‘strong growth,’ he said in an interview. Egypt, the Arab world’s most populous nation, and Saudi Arabia, the region’s biggest economy, have emerged as key markets for UAE-based firms seeking growth.”
“First Abu Dhabi Bank PJSC, UAE’s largest lender, last week offered to buy a majority stake in EFG Hermes. And the country’s biggest Islamic bank is scouting for deals in countries including Saudi Arabia, its chief executive said this month.”
“Alpha Dhabi operates in sectors including construction, hospitality and healthcare, and has already announced a string of deals, mostly within the UAE. The firm holds stakes in companies ranging from UAE’s largest health-care provider to Abu Dhabi real estate giant Aldar Properties PJSC, which has exposure to Egypt.” Farah ElBahrawy reports.
Top Shareholder Calls on Samsung to Pursue More Radical Green Push
Korea Herald
“Despite a series of actions and pledges to make its business more environmentally sustainable, Samsung is still facing calls for a more aggressive approach to reducing greenhouse gases from global institutional shareholders of the tech titan.”
”The latest to do so was APG, a Dutch pension fund that oversees nearly 630 billion euros ($716 billion). On Thursday, APG revealed that Samsung Electronics was one of the 10 South Korea-based investees to which it has sent a letter urging a greater effort to combat climate change, earlier in February.”
”APG called on the companies to evaluate their existing carbon reduction targets and make sure these are ‘sufficiently ambitious.’ APG holds a 0.5 percent stake in Samsung Electronics, maker of smartphones, home appliances, and semiconductor chips.”
”Samsung‘s environmental goals have become more ambitious. By 2025, Samsung seeks to expand the use of recycled materials, including repurposed underwater fishing nets, to all electronic goods, according to Vice Chairman Han Jong-hee. Also, Samsung plans to make all of its TVs and phone chargers operate on near-zero standby power, aims to eliminate 200 million batteries each year with the adoption of battery-free remote control, and looks to incorporate recycled materials into packaging boxes in the next three years.” Son ji Hyoung reports.
Largest Gold Market in Southeast Asia? Vietnam
“Gold continued to be the top asset class for 72 percent of Vietnamese investors, the WGC said citing a study of 2,000 investors last year. The outlook for the precious metal is positive with 81 percent of investors who previously invested in gold saying they would consider doing so again.”
VN Express Business News
“Vietnam was Southeast Asia’s largest gold bullion and coin market last year and among the top 10 globally. The demand in the country exceeded 31.1 metric tons compared to 28.7 tons in Thailand and 19.8 tons in Indonesia, according to the World Gold Council.”
“If jewelry was included, it went up to 43 tons, the second highest behind Indonesia’s 46.8 tons. Vietnam was the fourth largest market in Asia for bullion and coins behind India, Sri Lanka and China, and the eighth largest in the world.”
“Gold continued to be the top asset class for 72 percent of Vietnamese investors, the WGC said citing a study of 2,000 investors last year. The outlook for the precious metal is positive with 81 percent of investors who previously invested in gold saying they would consider doing so again.”
“To put that in perspective, the rates are 72 percent for Chinese and 67 percent for Indians, with the global figure standing at 45 percent. There is strong support for gold market liberalization in Vietnam, with 76 percent saying they should be allowed to open a gold investment account at banks to formalize the gold market.” Quang Tue reports.
Tweet of the Week
Sofia Horta e Costa breaks down everything that happened in China tech stocks this past week in a ten tweet thread.
"It's not the load that breaks you down, it's the way you carry it." — Lou Holtz