Emerging Markets Daily - February 25
Modi Lays Out Privatization Plan, Saudi Arabia Issues $1.8 B Eurobond, Covid-19 Costs for Africa, Copper at $12,000?, Foxconn/Fisker Join to Produce EVs
The Top 5 Emerging Markets Stories - February 25
India Govt Plans to Privatize 100 State-Owned Enterprises
“The government has an ambitious plan to monetise around 100 government-owned assets as part of the monetisation plan, said prime minister Narendra Modi when he spoke about various reforms undertaken in the Union Budget. ‘With this the government will be aiming to achieve Rs 2.5 trillion investment, we are going ahead with the mantra of monetise and modernise,’ Modi said.”
“Speaking at a webinar on privatisation by the Department of Investment and Public Asset Management (DIPAM), Modi said state-owned companies in four strategic sectors will be kept at bare minimum and that the government is committed to privatising PSUs in all sectors barring four strategic ones.” Business Standard reports
Saudi Arabia Issues Second-Ever Euro Bond Sale
“The world’s largest crude-oil exporter sold 1.5 billion euros of bonds ($1.8 billion), the second time it has issued debt in the common currency, after attracting orders for more than three times the notes on offer, according to a statement on the Finance Ministry’s website.”
“The Chinese government, which has the same rating as Saudi Arabia from Moody’s Investors Service, issued debt in euros at a negative rate for the first time last year…”
“The kingdom’s offering could prompt its Gulf Cooperation Council neighbors to tap the euro bond market, according to Sergey Dergachev, senior portfolio manager for emerging-market debt at Union Investment in Frankfurt. ‘A successful Saudi placement in euros will have a strong signaling effect for other higher-rated GCC sovereigns like Qatar or Abu Dhabi,’ he said.”
“‘It’s also about investor diversification,’ Dergachev said. The euro deal ‘will deepen the relationship with more European accounts,’ he said.” Bloomberg reports
Africa Faces Up to Cost of COVID-19
“As the global economy slowly rises to its feet, Africa faces reduced growth and looming debt, while the race for a Covid-19 vaccine risks leaving African economies out in the cold.”
“In 2020 Covid-19 looked set to largely spare Africa as it cut a deadly swath through other regions. No longer. In late January Zimbabwe’s foreign minister died from the virus, less than a fortnight after four top Malawian politicians had succumbed to it within 24 hours.”
“After an impressive early response to coronavirus, the situation is deteriorating across Africa. The continent’s coronavirus case fatality rate stood at 2.5% in late January, higher than the global level of 2.2%, John Nkengasong, head of the Africa Centres for Disease Control and Prevention (Africa CDC), told reporters.” African Business reports
Copper at $12,000? Leading Metals Trader Says Yes
“Copper could surge above a record to $12,000 a ton in 18 months on new demand from green initiatives, a leading metals trader said, giving one of the most bullish forecasts yet for the metal.”
“The bellwether material has already doubled since a nadir in March to reach a nine-year high, and is roughly 7% below the record of $10,190 set in 2011 as bets on an economic recovery and tighter supplies entice investors. But current prices would seem ‘far too low’ if governments fulfill pledges for green infrastructure and electric-vehicle incentives, Concord Resources Ltd. said.”
“‘People need to be aware of the potential for a changing paradigm in terms of pricing,’ said Mark Hansen, chief executive officer of the trading house. ‘In copper, the market is not yet pricing in the addition of potentially millions of new tons of copper demand over the coming decade.’” Bloomberg reports.
Foxconn Teams up with Fisker to Make Electric Vehicles
“Electric-car maker Fisker Inc said it will work with Apple Inc supplier Foxconn to produce more than 250,000 vehicles a year beginning in late 2023, sending its shares up 18%.”
“Foxconn, Apple’s main iPhone maker, has ramped up its interest in electric vehicles (EVs) over the past year or so, announcing deals with Chinese electric-car maker Byton and automakers Zhejiang Geely Holding Group and Stellantis NV’s Fiat Chrysler unit.”
“Sources have said Apple is targeting 2024 to produce a passenger vehicle. Foxconn aims to provide components or services to 10% of the world’s EVs by 2025 to 2027, Chairman Liu Young-way said in October.” Reuters reports