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Emerging Markets Daily - February 3
Kuwait Bleeds Cash, Alibaba to Sell $5 B Bonds, South Korea Tops Innovation List, Some 300 Million Indians May Have Had Covid, Turkey Pledges Tight Monetary Policy to 2023
The Top 5 Emerging Markets Stories - February 3
Kuwait, Newly Added to MSCI EM Index, Is Running Out of Cash - Bloomberg
“Kuwait’s government has transferred the last of its performing assets to the country’s sovereign wealth fund in exchange for cash to plug a monthly budget deficit of $3.3 billion, a person familiar with the matter said, leaving one of the world’s richest nations with few options to pay its bills.”
“Fitch on Wednesday cut Kuwait’s outlook to negative from stable, citing ‘the imminent depletion of liquid assets’ in the absence of parliamentary authorization for the government to borrow. The rating was affirmed at AA.”
“Though Kuwait has one of the highest per capita incomes on earth, years of lower oil prices have forced the government to burn through its cash reserves while a festering political standoff has prevented it from borrowing. Desperate to generate liquidity, the government began swapping its best assets with the FGF for cash last year, but with those now gone, it’s not clear how it’ll cover its eighth consecutive budget deficit, projected at 12 billion dinars for the fiscal year beginning April.”
“‘It’s a very immediate crisis now, not a long-term one like it was before,’” said Nawaf Alabduljader, a business management professor at Kuwait University. ‘The Future Generations Fund is our life jacket but we don’t have a boat to take us to shore, we have no vision. We need to restructure our economy and move away from the welfare state,’” Bloomberg reports.
Alibaba to Tap International Debt Markets for $5 Billion - South China Morning Post
“Alibaba Group Holdings is selling up to US$5 billion in international debt markets as analysts brush off the impact of an antitrust investigation into its mainland China e-commerce business.”
“The offering by the Hangzhou-based e-commerce behemoth includes a tranche of sustainability notes due in 2041, according to filings where Alibaba’s shares are listed in both the US and Hong Kong.”
“The senior unsecured notes will come in multiple tranches, with maturities of up to 40 years. Alibaba, which owns this newspaper, will fix the exact size of the offering and the bonds’ interest rates after discussing terms with fixed-income investors. It kicked off marketing calls on Wednesday, people familiar said,” South China Morning Post reports.
South Korea, Singapore Top Global Innovation Index - Singapore Straits Times/Bloomberg
“South Korea returned to first place in the latest Bloomberg Innovation Index, while the US dropped out of a top 10 that features a cluster of European countries.”
“South Korea regained the crown from Germany, which dropped to fourth place. The Asian nation has now topped the index for seven of the nine years that it has been published.”
“Singapore and Switzerland each moved up one spot to rank second and third,” Singapore Straits Times/Bloomberg report.
Some 300 Million Indians May Have Had Covid - Reuters
“About one in four of India’s 1.35 billion people may have been infected with the coronavirus, said a source with direct knowledge of a government serological survey, suggesting the country’s real caseload was many times higher than reported.
“India has confirmed 10.8 million COVID-19 infections, the most anywhere outside the United States. But the survey, whose findings are much more conservative than a private one from last week, indicates India’s actual cases may have crossed 300 million.”
“The state-run Indian Council of Medical Research (ICMR), which conducted the survey, said it would only share the findings at a news conference on Thursday. The source declined to be named ahead of the official announcement,” Reuters reports.
Turkey Central Bank Aims for Tight Policy Through 2023 - Daily Sabah
“Turkey’s central bank Tuesday said a tight and cautious monetary policy stance should be maintained resolutely until 2023.”
“The remarks came in a letter the bank penned to the government explaining why inflation is so much higher than the 5% target.”
“The Central Bank of the Republic of Turkey (CBRT) said that if any new information points to the risk of inflation expectations and pricing behavior diverging from the medium-term target path, ‘additional front-loaded and decisive tightening will be implemented.’”
“The Turkish lira led gains across emerging market currencies on Tuesday on optimism over tight monetary policy and improving economic conditions,” Daily Sabah reports.