Emerging Markets Daily - January 21
Alibaba Drops as China Hits At Corruption, Reliance 4Q Profits Sizzle, Majors Pull Out of Myanmar Gas, US-Russia Ukraine Talks, Mideast Crypto Exchange Draws Investors
The Top 5 Stories Shaping Emerging Markets from Global Media - January 21
China Vows ‘No Mercy’ on Corruption and Tech Investigations Will Continue
“Alibaba Group Holding Ltd. took a hit Friday, falling 3.4% in Hong Kong after China’s Central Television network aired a five-part documentary series, ‘Zero Tolerance,’ to coincide with the anti-graft meeting.”
Bloomberg
“China vowed to curb the influence of technology companies and root out corruption tied to the ‘disorderly’ expansion of capital, a sign that authorities may expand a regulatory crackdown that erased more than $1 trillion of market value last year.”
“In a sweeping communique following the plenary session of the Chinese Communist Party’s top anti-graft group, the government said it would break the ties between money and power, and tackle corruption in a range of industries.”
“‘…Efforts will be made to investigate and punish corrupt behaviors behind the disorderly expansion of capital and platform monopolies, and cut off the link between power and capital,’ the Central Commission for Discipline Inspection said in the statement. ‘Show no mercy to those who engage in political gangs, small circles, and interest groups within the party, and strictly educate, manage and supervise young cadres.’
“The comments suggest President Xi Jinping’s government isn’t finished with a regulatory onslaught that upended industries from e-commerce to education and ride-hailing last year…Alibaba Group Holding Ltd. took a hit Friday, falling 3.4% in Hong Kong after China’s Central Television network aired a five-part documentary series, ‘Zero Tolerance,’ to coincide with the anti-graft meeting.”
“…A nationwide anti-corruption crackdown focusing on financial institutions and regulators has netted more than 20 officials since its start in October as authorities step up scrutiny of the nation’s $54 trillion financial system. Adding further uncertainty to the outlook for tech firms, Reuters reported earlier this week that China’s internet regulator would require tech companies to seek approval before making investments or raising funds.” Bloomberg reports.
Reliance Industries Posts 41.6% Jump In 4Q Net Profit
Today Online/Reuters
“Reliance Industries Ltd, India's most valuable company, on Friday posted a better-than-expected 41.6per cent jump in profit for the December quarter, boosted by strong performance in its oil-to-chemicals and retail businesses.”
“Reliance's retail business rode a boom in consumer demand, with the lifting of most COVID-19 restrictions toward the end of 2021, while higher refining margins and improved price realizations bolstered its mainstay energy business.”
“The company, led by Asia's richest man Mukesh Ambani, said on Friday its consolidated profit rose to 185.49 billion Indian rupees (US$2.50 billion) in the quarter ended Dec. 31 from 131.01 billion rupees a year earlier.”
“Analysts, on average, had expected a profit of 154.74 billion rupees, according to Refinitiv data. Revenue from Reliance's oil-to-chemicals unit – home to both its refining and petrochemicals operations – surged 57per cent to 1.31 trillion rupees, while the retail segment revenue jumped more than 52per cent to 577.17 billion rupees.”
The company said overall revenue from operations rose 54per cent to 1.91 trillion rupees. Today Online/Reuters report.
Total, Chevron To Pull Out of Myanmar Gas Project; Thailand Firm Could Follow
Bangkok Post
"The oil majors TotalEnergies and Chevron Corp, partners in a major gas project in Myanmar, have decided to withdraw from the country, they said on Friday, citing the worsening humanitarian situation following last year’s coup.”
“Thailand’s PTT Exploration and Production Plc, which holds a 25.5% share in the TotalEnergies-led venture, is ‘carefully considering’ its direction in Myanmar after the announcement, said Montri Rawanchaikul, chief executive of parent company PTT Plc.”
“PTTEP is ‘putting the utmost importance for energy security of both Thailand and Myanmar’, it said in a statement. Since the February coup, Myanmar security forces have killed more than 1,400 people and arrested thousands to try to crush resistance, local non-governmental organisation Assistance Association for Political Prisoners said. The junta disputes the figures.”
“TotalEnergies and Chevron, along with other firms including PTTEP, were part of a joint venture operating the Yadana gas project off Myanmar’s southwest coast, and the MGTC transport system carrying gas from the field to the Myanmar/Thailand border.”
“‘The situation, in terms of human rights and more generally the rule of law, which have kept worsening in Myanmar since the coup of February 2021, has led us to reassess the situation and no longer allows TotalEnergies to make a sufficiently positive contribution in the country,’ TotalEnergies said in a statement.” Bangkok Post reports.
Geopolitics: US, Russia Continue Negotiating Over Ukraine to Defuse Crisis
“Russia has massed about 100,000 troops near Ukraine in response to what it says are threats to its security from the North Atlantic Treaty Organization and Western powers. The move has created one of the worst crises between Russia and the West since the Cold War, with many fearing Russia will invade its smaller neighbor.”
Wall Street Journal
“Secretary of State Antony Blinken said the U.S. would formally address the Kremlin’s claims that Western powers threaten Russian security, as both sides agreed to continue talks on how to avert a possible Russian invasion of Ukraine.”
“Russia has massed about 100,000 troops near Ukraine in response to what it says are threats to its security from the North Atlantic Treaty Organization and Western powers. The move has created one of the worst crises between Russia and the West since the Cold War, with many fearing Russia will invade its smaller neighbor.”
“The Kremlin has blamed NATO for endangering its security and requested a written response to its demands that the alliance stop accepting new members and reduce its force posture in Eastern Europe.”
“While U.S. and Western officials have rejected those demands, Mr. Blinken agreed to respond in detail to Russia’s concerns and provide written proposals for reciprocal moves to improve security in the region.”
“‘We will share with Russia a response to the concerns that it’s raised, our own concerns, and put some ideas on the table for consideration, and then we plan to meet again after Russia’s had the opportunity to look at that paper,’ Mr. Blinken told reporters after meeting with Russian Foreign Minister Sergei Lavrov.”
“Still, Mr. Blinken warned Mr. Lavrov that any moves against Ukraine would trigger financial sanctions or other measures. ‘We are doing everything possible to make clear to Russia that there will be, as I said, a swift, severe and united response to any form of aggression by Russia directed toward Ukraine,’ Mr. Blinken said.” The Wall Street Journal reports.
Mideast Crypto Exchange Rain Raises $110 Million in New Funding Round
“Founded in 2017….Rain will use the proceeds of the funding round to secure more licences in the Mena region, Turkey and Pakistan, enhance its technology through an advanced trading platform and grow the team.”
The National
“Rain Financial, operator of the Rain cryptocurrency exchange that is licensed by the Central Bank of Bahrain, raised $110 million in series B funding as digital currencies gain more acceptance among mainstream investors globally.”
“The round was led by San Francisco-based cryptocurrency-focused investment company Paradigm and Silicon Valley venture capital company Kleiner Perkins.”
“Rain Financial also received backing from US-based Coinbase Ventures, Global Founders Capital, Middle East Venture Partners, Cadenza Ventures, Jimco and CMT Digital, the company said on Tuesday.”
“Founded in 2017 by Abdullah Almoaiqel, AJ Nelson, Joseph Dallago and Yehia Badawy, Rain will use the proceeds of the funding round to secure more licences in the Mena region, Turkey and Pakistan, enhance its technology through an advanced trading platform and grow the team.”
“…Rain Financial was set up in 2017 and received a licence to operate as a crypto-asset broker by Bahrain's central bank in 2019. The company offers its customers a way to buy and sell digital currencies, as well as custodian services to hold their assets.”
“In 2019, the start-up raised $2.5m from BitMex Ventures and Bahraini cryptocurrency fund Blockwater…The start-up has performed more than $1.9 billion worth of transactions to date and hosts more than 185,000 active users. With more than 400 employees, Rain will continue to grow its team across the region and hopes to double in size this year, the company said.” Deepthi Nair reports.
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