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Emerging Markets Daily - January 27
The Top 5 EM Stories of the Day
The Top 5 Emerging Markets Stories - January 27
UBS Says: Go Long Emerging Markets, Especially Russia, Latin America - Bloomberg
“Emerging-market stocks, particularly those in Russia and Latin America, will be the hottest items for equity investors this year. That’s the view of the wealth management arm of UBS Group AG, which oversees more than $4 trillion for its clients.”
“A reviving global economy helped by vaccine rollouts, reduced uncertainty around U.S. foreign policy, a weaker dollar, stronger commodities and stimulus in major markets should all align behind this theme.”
“In response, UBS Wealth Management has shifted its preference in equities to developing countries, which are more sensitive to global growth and are cheaper than developed markets. MSCI Inc.’s emerging-market index trades at 16 times expected earnings in the next 12 months, well below a P/E ratio of 22 times for the S&P 500 and less than the 17 times for the Stoxx Europe 600,” Bloomberg reports.
Investors Rush to $5.4 Billion Kuaishou Technology Hong Kong IPO - South China Morning Post
“Overwhelming response to Kuaishou Technology’s US$5.4 billion Hong Kong initial public offering (IPO) prompted underwriters to close the institutional order book two days ahead of schedule, as global funds jostle for shares in the world’s second-largest short video platform.”
“The retail portion, equivalent to 9.1 million shares or a tiny 2.5 per cent of the global offering, was overbought by 210 times on Tuesday, the first day of a weeklong subscription period ending Friday. The ratio is based on a calculation by South China Morning Post using the HK$226 billion (US$29.2 billion) of margin loans extended by various brokers in the city to buy the shares.”
“Inquiries and early bookings for Kuaishou’s shares had been helped by the record close of the Nasdaq Composite Index this week, which ‘has been helpful to the valuation of technology stocks,’ said Philip Capital’s director Louis Wong, adding that the HK$31.5 billion of margin loan applications received by his brokerage was 58 per cent over his budget,” South China Morning Post reports.
Saudi Aramco To Consider Selling More Shares - Reuters
“Saudi Aramco may consider selling more shares if market conditions are right, the head of Saudi Arabia’s sovereign wealth fund told a news briefing on Tuesday.”
“The Saudi government sold more than 1.7% of Aramco in a 2019 initial public offering that raised a record $29.4 billion, triggering more IPOs in the kingdom, which is also seeking to deepen its capital markets to reduce its reliance on oil.”
“Yasir al-Rumayyan, who is governor of Saudi Arabia’s Public Investment Fund (PIF), made the comments during a media briefing to give details on the PIF’s five-year plan.”
“The PIF, whose holdings include a stake in Uber, plans to double its assets to 4 trillion riyals ($1.07 trillion) by 2025, Prince Mohammed bin Salman said on Sunday, making it one of the world’s biggest sovereign wealth funds,” Reuters reports.
Oil Prices to Hit $50 Per Barrel This Year, IMF Says - The National
“The International Monetary Fund expects oil prices to rebound to an average of $50 per barrel this year, which is nearly 20 per cent higher than 2020 levels, amid vaccine rollouts and growth in the global economy.”
“Brent, the international benchmark, declined by an average of nearly 25 per cent last year, as demand crumbled due to mobility restrictions imposed in an attempt to stop the spread of the Covid-19 pandemic.”
“The Washington-based lender cautioned, however, that average prices for 2021 will remain ‘well below’ the average for 2019. The IMF expects prices to average $48.80 per barrel in 2022,” The National reports.
Asia Hedge Funds Bet - and Win - on Solar Stocks - Bloomberg
“Solar energy is back in favor with hedge funds.”
“The sector was among the best investments in 2020 for Asia-based managers including LyGH Capital, Pinpoint Asset Management, Sylebra Capital and Zaaba Capital, helping them to beat global funds’ 9.5% average returns.”
“LyGH has put about a quarter of its investments into solar and power storage, said Grace Lu, chief investment officer of the Singapore-based asset manager, which oversees about $500 million in hedge and long-only funds. Polysilicon maker Daqo New Energy Corp. was the largest profit contributor to Zaaba’s Asia hedge fund, which gained about 30% last year, said a person with knowledge of the matter.”
“‘The growth visibility for the next 10, 20 years is very clear,’ said Lu, whose fund returned 32% last year. ‘It is actually based on economics, because now it is cheaper than conventional energy.’” Bloomberg reports.