Emerging Markets Daily - January 14
India, Vietnam Lead Asia '22 Growth, Ant Group's Setback, Russia Says 'Progress' in Iran Nuke Talks, Citi Sells ASEAN Assets, Starlink to Soon Go Live in Philippines
The Top 5 Stories Shaping Emerging Markets from Global Media - January 14
India, Vietnam, and Philippines to Drive Emerging Asia Growth in 2022
Emerging World
We recently viewed the latest Asia Pacific forecast put out by Fitch. On a broad level, they see regional growth to slow, weighed down by China. In ‘21, Emerging Asia grew above 7%, but it hovers around 5.7% in the Fitch forecast for ‘22. But if you take China out of the Emerging Asia numbers, the forecast for ‘22 rises above 6% again.
Three countries are set to be stand-out growth performers, according to the Fitch forecast: India, Vietnam, and Philippines. Fitch is particularly bullish on Vietnam’s role as a manufacturing hub. “We continue to flag Vietnam as a beneficiary of shifting supply chains,” Fitch wrote, “particularly with regard to low value-add manufacturing re-locating out of China.”
As for China, Fitch sees 5.4% growth in 2022, considerably down from its 7.8% growth in ‘21, Fitch noted. They are not alone. The IMF is also forecasting a considerable drop in China’s growth for ‘22, down from its 8% figure in ‘21 to 5.6% in ‘22.
Here are Fitch’s 2022 Asia-Pacific forecasts for the top 8 countries they explored. Please note: they included Pakistan, but not Bangladesh in their forecast. Bangladesh is expected to be an Asia star performer with 6.6% growth expected to be clocked by the end of their fiscal year in June 2022, according to the IMF.
Asia-Pacific Top 8 of Selected Countries - Fitch Forecasts (compiled by Emerging World)
India - 8.6%
Vietnam - 7%
Philippines - 6.5%
Malaysia - 5.5%
China - 5.4%
Indonesia - 4.7%
Pakistan - 3.9%
Thailand - 3.7%
Of note in the above, Malaysia and Thailand are displaying the biggest jump from 2021. Thailand grew a sluggish 1.1% in 2021 and Malaysia hit 1.5%.
New Setback for Ant Group As State-Backed Investor Pulls Out of Pending Deal
Financial Times
“Jack Ma’s Ant Group has suffered a setback to its government-led restructuring efforts after a state-owned asset manager unexpectedly pulled out of a deal to invest in the fintech’s lending arm.”
“China Cinda Asset Management, controlled by the country’s finance ministry, was set to invest Rmb6bn ($946m) in exchange for 20 per cent of Ant’s loans business, but said late on Thursday that it was withdrawing from the deal after ‘prudent commercial consideration and negotiation with the Target Company'.”
“Ant, which is controlled by the billionaire tech entrepreneur Ma, has been restructuring its business since Chinese regulators pulled the plug on its blockbuster $37bn initial public offering just days before it was set to debut in November 2020.”
“Ma has largely disappeared from public view as Ant and his ecommerce group Alibaba have come under severe government pressure. Financial authorities have focused on shrinking Ant’s business and limiting financial risk as part of a ‘rectification’ campaign for the fintech company, which was China’s largest issuer of consumer credit.”
“The rectification plan includes winding down Ant’s biggest self-run fund and forcing it to spin off two of its most prized businesses into new companies, which have in turn accepted state-owned shareholders.” The FT reports.
Geopolitics: Russia Says Deal Between Iran and Western Powers Near
Bloomberg
“The Kremlin’s top diplomat said he expects world powers will salvage the landmark accord limiting Iran’s nuclear activities in exchange for sanctions relief as the latest round of talks grinds on.”
“The comments by Russian Foreign Minister Sergei Lavrov came as his Iranian counterpart met officials in China, which has hosted a series of meetings this week with top Middle East envoys to discuss regional security and economic cooperation.”
“The eighth round of negotiations to reboot the 2015 nuclear accord -- scuttled almost four years ago by the Trump administration -- is concluding its third week in Vienna. Sides will break for two days for consultations, Iran’s state-run IRNA news agency reported. ‘There’s real progress,’ Lavrov told reporters on Friday in Moscow. ‘We are expecting an agreement to be reached.’”
“Russia’s optimism followed words of caution by U.S. Secretary of State Antony Blinken on Thursday, when he told National Public Radio in an interview that just weeks remain for sides to reach an accord. U.S. officials have suggested Iran’s rapidly expanding uranium-enrichment program could soon render the accord obsolete.”
“…Some analysts have named China a key player in deciding the outcome of the nuclear talks, which also involve France, Germany and the U.K. Beijing’s deepening cooperation with Tehran in the face of U.S. sanctions has given the Islamic Republic’s government an economic escape route.” Bloomberg reports.
Singapore’s UOB to Acquire Citi’s ASEAN Assets for $3.6 Billion
Nikkei Asia
“Singapore's United Overseas Bank said on Friday it will acquire Citigroup's consumer banking businesses in four Southeast Asian countries, a major consolidation of the banking sector in a region where digital services are becoming increasingly important.”
“UOB says it will acquire the U.S. bank's unsecured and secured lending portfolios, wealth management and retail deposit businesses in Thailand, Malaysia, Indonesia and Vietnam for about 4.9 billion Singapore dollars ($3.6 billion). Citi's roughly 5,000 employees in these businesses will be transferred to the UOB group.”
“The deal is a part of Citi's global restructuring plan: The U.S. bank last April said it intended to exit from 13 markets, including the four Southeast Asian countries. Citi had been looking for buyers through auction processes. Citi CFO Mark Mason said on Friday in its statement that the sale of units in these four markets serves to ‘demonstrate our sense of urgency to execute our strategic refresh.’”
“For UOB, the deal enables it to instantly expand its customer base in the four markets, from 2.9 million retail customers to 5.3 million. "‘he speed to market is very important. We need to scale, we need to cross-sell,’ UOB CEO Wee Ee Cheong said during an online news conference.”
“Thailand will be the biggest acquisition of the four, increasing UOB's customer base in the country from 1.3 million people to 2.4 million, the bank said. In Malaysia, the number will go up from 900,000 to 1.5 million after the deal.” Nikkei Asia reports.
Elon Musk’s Starlink to Go Live in Philippines and ‘45 Others’ in 2022
“The project, though not a new idea, could transform the world — by delivering high-speed internet through a network of about 12,000 satellites, initially. On January 5, 2022 Space X launched 49 more satellites, bringing the number of Starlink's constellation to about 1,800 currently in orbit.”
Gulf News
“Customers are being told that Starlink, the satellite internet service of SpaceX, will go ‘live’ across the archipelago this year.”
“Customers seeking to buy a ‘starter kit’ (satellite dish and router) can now place orders. Customers may purchase the kit online for $499 (about Php25,000) — which is then delivered to the customer’s address. The monthly service fee is $99 (about Php5,000).”
“Emails sent to customers did not mention a specific date; only a ‘target’ of 2022 Starlink launch in the Asian country, alongside ‘45 others’.”
“The project, though not a new idea, could transform the world — by delivering high-speed internet through a network of about 12,000 satellites, initially. On January 5, 2022 Space X launched 49 more satellites, bringing the number of Starlink's constellation to about 1,800 currently in orbit.”
“In 2020, the company promised speeds of between 50 and 150 Mbps in North America. In February 2021, Musk said that Startlink’s internet will double to 300 Mbps. As of December 2021, some beta testers in Australia reported speeds of up to 200 mbps while driving a car at 100 km/h.”
Happy weekend fellow travelers. Until soon.
"Be happy for this moment. This moment is your life."
— Omar Khayyám (The Rubáiyát of Omar Khayyám)