Emerging Markets Daily - February 24
Hong Kong Stocks Crater, S. Korea Markets Dip on Foreign Selling, India Covid Crisis Worsening, Jobs Destruction Looms in Turkey, Huawei "Slight" Growth
The Top 5 Emerging Markets Stories - February 24
Hong Kong Stocks Crater on First Trading Tax Hike Since 1993
“Hong Kong unveiled its first stamp-duty increase on stock trades since 1993, sparking a broad selloff in the $7.6 trillion market and sending shares of the city’s exchange to their biggest plunge in more than five years.”
“The planned trading-tax increase to 0.13% from 0.10% was part of a raft of new measures announced in Hong Kong’s budget that included increased spending to help residents weather the pandemic. Even as the city’s economy has plunged over the past year, stock prices and trading have surged amid a global market boom…”
“Hong Kong Exchanges & Clearing Ltd., the world’s biggest exchange operator by market value, plunged 8.8% on Wednesday despite announcing a record profit for 2020. Calvin Tai, the exchange’s interim chief executive officer, said in an earnings call that the bourse wasn’t consulted by the government on the stamp-duty decision. Hong Kong’s benchmark Hang Seng Index lost 3%, the most among Asian equity gauges.” Bloomberg reports
South Korea Stocks Dip More than 2% on Foreign Selling
“South Korean stocks tumbled by more than two percent to dip below the 3,000-point threshold Wednesday on massive foreign selling, largely due to concerns over a U.S. bond yield hike that drove the key stock index down for the past few sessions.”
“The Korean won fell against the U.S. dollar. The benchmark Korea Composite Stock Price Index (KOSPI) dipped 75.11 points, or 2.45 percent, to close at 2,994.98 points. Trading volume was moderate at about 1.5 billion shares worth some 16.7 trillion won ($17.7 billion), with losers outnumbering gainers 835 to 57.”
“Foreigners sold a net 427 billion won, while retail investors purchased a net 560 billion won. Institutions offloaded a net 134 billion won. ‘The increase in foreign sell-offs raised uncertainties,’ said Kiwoom Securities analyst Seo Sang-young.”
“Investor concerns grew as optimism for quick global recovery spurred speculation for rate hikes. Foreign selling continued despite the Federal Reserve chairman's overnight comments that the Fed would continue its fiscal policy support. In Seoul, most large caps closed lower.” Korea Times reports.
India Warns Of Worsening Covid-19 Crisis as Vaccines Expand
“India announced an expansion of its vaccination programme on Wednesday but warned that breaches of coronavirus protocols could worsen an infection surge in many states. Nearly a month after the health minister declared that COVID-19 had been contained, states such as Maharashtra in the west and Kerala in the south have reported a surge in cases, as reluctance grows over mask-wearing and social distancing.”
“India’s infections are the second highest in the world at 11.03 million, swelled in the past 24 hours by 13,742, health ministry data shows. Deaths rose by a two-week high of 104 to 156,567. Any laxity in implementing stringent measures to curb the spread, especially in view of new strains of virus ... could compound the situation,” the ministry said in a statement singling out nine states and a federal territory.”
“India has confirmed the long-time presence of two mutant variants - N440K and E484Q - in addition to those first detected in Brazil, Britain and South Africa,” Reuters reports.
Jobs Destruction Looms in Turkey on Virus Aid Cut
“Turkey’s small businesses warned President Recep Tayyip Erdogan that ending pandemic support could deliver a severe drop in income for workers and major job losses if firms go bankrupt.”
“Erdogan said last week that government payments to employees whose place of work has been partially or fully shut by the health emergency will be given ‘for the last time at the end of March.’ A ban on redundancies will be retained, but the changes set alarm bells ringing for the small and medium-sized firms which employ nearly 74% of Turkey’s total workforce…”
“Turkey has provided more than 30 billion liras ($4.2 billion) to hard-hit small businesses to help pay salaries and rents rent but it was unclear whether that would continue. The government said some new incentives were being prepared. Official unemployment rose to 12.9% in November.” Bloomberg reports
Huawei Reveals “Slight” Growth in 2020
“Huawei Technologies Co, which has struggled amid the US-China tech war, took the spotlight on Tuesday at the opening of telecommunications industry trade show MWC Shanghai, where it revealed an uptick in its business and presented a new folding smartphone for the domestic market.”
“Ken Hu Houkun, privately held Huawei’s rotating chairman, said in his keynote speech at the event that the company – the world’s largest telecommunications equipment maker and China’s biggest smartphone vendor – recorded ‘slight’ growth on the back of continuous support from business partners, despite being on the US trade blacklist.” South China Morning Post reports
