Emerging Markets Daily - January 24
U.S Stock Market Drops Sharply, Ethiopia Peace Looms, UAE Approves SPACs, Pakistan Holds Rates Steady, Russian Bigwigs Denounce Proposed Crypto Ban
The Top 5 Stories Shaping Emerging Markets from Global Media - January 24
U.S Stock Market Continue Free-Fall, Dow Drops 1,000 Points
Bitcoin loses half of its market value since November
Wall Street Journal
“The Dow industrials dropped 1,000 points Monday, as major U.S. stock indexes’ 2022 swoon accelerated.”
“The market slide extended to the cryptocurrency market, with Bitcoin losing half of its market value since its November high. Favored speculative stock investments, including technology stocks and smaller company stocks have led the market slump. The Russell 2000 index of small stocks is down 21% from its 52 week high, with the tech-heavy Nasdaq Composite down almost 19%.”
“Stocks, oil and cryptocurrencies fell as investors prepared for a Federal Reserve meeting and tracked tensions between the West and Russia over the military buildup on the border with Ukraine. The technology-focused Nasdaq Composite lost 4.1%. The Dow Jones Industrial Average fell 2.7% in the afternoon, putting the blue-chip index on track for its seventh consecutive day of losses.”
“…The biggest single factor driving yields up and stock prices down is the expectation that the Fed will raise rates multiple times in 2022 to rein in inflation, which is running at its fastest pace in 40 years. The central bank is set to gather for a two-day meeting Tuesday. At its conclusion on Wednesday, Chairman Jerome Powell is expected to signal that rates will likely rise as soon as March.” WSJ reports.
Promise of Peace Looms in War-Scarred Ethiopia
African Business
“Ethiopia’s embattled prime minister Abiy Ahmed, who faces accusations of war crimes, has raised hopes of peace after making progress in ending hostilities in the 14-month conflict centred in the northern province of Tigray.”
“As the country celebrated Orthodox Christmas on 8 January, the government released political prisoners, including senior members of the Tigray People’s Liberation Front (TPLF) and Jawar Mohammed, founder of the Oromiya Media Network.”
“Adding to signs of peace, the prime minister discussed ‘strengthening cooperation’ with US President Joe Biden, and allowed the African Union’s high representative, former Nigerian president Olusegun Obasanjo, to meet leaders of the TPLF.”
“The good will comes after government troops recaptured several strategic towns from Tigray fighters late last year.”
“The advances reversed a string of rebel victories in early November that at one point saw Tigray troops seize Dessie and Kombolcha, two key towns on the road between Tigray and Addis Ababa. On 3 November the Oromo Liberation Army (OLA), an ethnic Oromo group fighting alongside the TPLF, even claimed to be on the outskirts of the capital city of Addis Ababa.”
“Analysts say the change of tone is based on Ethiopia’s purchase of armed Turkish drones which have helped to turn the tide of war and threatened further trade backlash form the United States.” African Business reports.
UAE Authorities Approve First SPAC Regulatory Framework
The National
“The Abu Dhabi Securities Exchange (ADX) welcomed the Securities and Commodities Authority’s approval of the region’s first special purpose acquisition company (Spac) regulatory framework.”
“The framework is part of the UAE's plans to develop its capital markets and bring its products and services in line with those of global peers. The move is expected to pave the way for the listing of the first Spac on the ADX this year, the Abu Dhabi bourse said on Monday.”
“Spacs, or blank-cheque companies, are entities with no commercial operations and trade without business fundamentals. They are formed with the intention of raising funds through an initial public offering and seek to acquire existing companies.”
“….Many regional and global companies backed by Middle East investors are listing on global exchanges through blank-cheque companies.”
“Lucid Motors, which is backed by Saudi Arabia’s Public Investment Fund, announced that it would go public by merging with the Churchill Capital IV Corporation Spac while music-streaming service Anghami said in March that it would list on the Nasdaq through a merger with Vistas Media Acquisition Company.”
“Middle East start-up Swvl, which provides mass transit and shared mobility services, said it will list on the Nasdaq through a Spac with Queen’s Gambit Growth Capital.”
“Mubadala Capital, the asset management arm of Mubadala Investment Company, unveiled a $200m blank-cheque company IPO in August, which will seek acquisitions in media and technology sectors.” Deepthi Nair reports.
Pakistan Central Bank Holds Rates Steady As Fast Inflation Seen Easing
Bloomberg
“Pakistan held its benchmark interest rate steady for the first time in four meetings, opting to watch the effects of previous increases on Asia’s fastest inflation.”
“The State Bank of Pakistan kept the target rate unchanged at 9.75%, Governor Reza Baqir told reporters in Karachi on Monday…While the SBP sees inflation -- which came in at 12.3% in December -- staying elevated for a bit due to higher energy prices and because of a low base the year ago, it cut the gross domestic product growth forecast to 4.5% for the fiscal year ending June from close to 5% seen previously.”
“The International Monetary Fund’s board is due to review a $6 billion loan program for Pakistan on Jan. 28”. Bloomberg reports.
Russian Tech and Political Executives Denounce Crypto Ban Proposal
“Russia’s recent ban on crypto has drawn criticism from a number of big names, including Alexei Navalny’s chief of staff, Leonid Volkov, and Telegram founder Pavel Durov.”
“On Thursday, Russia’s central bank published a report proposing a blanket ban on domestic crypto trading and mining. The report stated that the risks of crypto are ‘much higher for emerging markets, including Russia.’”
“However, it appears that this proposed ban isn’t universally accepted in the country. A Saturday post by Telegram founder Pavel Durov stated that the proposed ban on crypto would ‘destroy a number of sectors of the high-tech economy.’”
He added: “Such a ban will inevitably slow down the development of blockchain technologies in general. These technologies improve the efficiency and safety of many human activities, from finance to the arts.”
“While Durov conceded that the ‘desire to regulate the circulation of cryptocurrencies is natural on the part of any financial authority,’ he concluded that ‘such a ban is unlikely to stop unscrupulous players, but it will put an end to legal Russian projects in this area.’”
“Navalny is an opposition leader in Russia and founder of The Anti-Corruption Foundation (FBK). In August 2020, he was poisoned with the nerve agent Novichok. After recovering in Germany, he returned to Russia in January 2021 where he was arrested and has remained imprisoned since.” CoinTelegraph reports.
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