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Emerging Markets Daily - January 31
Xiaomi Sues to Restore US Markets Access, India Moves to Ban Crypto, UAE To Grant Citizenship to Investors, Argentina Proposes $44 B IMF Debt Deal, Philippine Stocks Crater
Xiaomi Sues in US Court to Overturn Investment Ban - South China Morning Post
“Xiaomi Corp, the world’s third-largest smartphone vendor, has sued the defence and treasury departments of the United States, seeking to undo the former Trump administration’s ban that prohibits US investors from owning the company’s shares.”
“The US Department of Defence (DOD) designation of Xiaomi’s affiliation with the People’s Liberation Army (PLA) of China is ‘unconstitutional’ as ‘it deprives Xiaomi of its liberty and property rights without due process of law,’ according to the Beijing-based company’s filing in the US District Court of Columbia.”
“‘Xiaomi faces imminent, severe, and irreparable harm if the Designation remains in place and the restrictions take effect,’” the company said in its filing, which named as defendants Defence Secretary Lloyd Austin and Treasury Secretary Janet Yellen, both appointees of President Joe Biden’s administration,” South China Morning Post reports.
India Seeks to Ban All Private Cryptocurrencies, Introduce Digital Rupee - Hindustan Times
“The Regulation of Official Digital Currency Bill, 2021, which is scheduled to be tabled at the upcoming Union Budget session, aims “to create a facilitative framework for the creation of the official digital currency” and “prohibit all private cryptocurrencies in India.”
“The Union government is reportedly going to table a bill in the Budget Session of Parliament banning all private cryptocurrencies such as bitcoin in India and which will also deal with the creation of a legislative framework for an official digital currency. The Reserve Bank of India (RBI) is also exploring the option of issuing a digital version of the rupee, which could serve as the Central Bank Digital Currency (CBDC), a booklet on payment systems has said,” Hindustan Times reports.
UAE Will Grant Citizenship to Investors, Professionals - Reuters
“The United Arab Emirates has adopted amendments that would allow the Gulf state to grant citizenship to investors and other professionals including scientists, doctors and their families, the government said on Saturday.
“‘The UAE cabinet, local Emiri courts and executive councils will nominate those eligible for the citizenship under clear criteria set for each category,’ Dubai’s ruler and UAE Vice President Sheikh Mohammed bin Rashid Al Maktoum said in a twitter post.”
“‘The law allows receivers of the UAE passport to keep their existing citizenship,’ Sheikh Mohammed added.”
“It was unclear if new passport holders would benefit from the public welfare system. The UAE spends billions of dollars each year on free education, healthcare, housing loans and grants for its estimated 1.4 million citizens,” Reuters reports.
Argentina Seeks $44 Billion IMF Debt Deal - Wall Street Journal
“With Argentina broke, Finance Minister Martín Guzmán is pushing for a deal by May with the International Monetary Fund to repay $44 billion in debt. To win the IMF’s acquiescence, he’ll narrow a yawning budget gap, he said in an interview on Friday.”
“It is the traditional path that Argentina, which has defaulted nine times on sovereign debt, has taken when its economy has hit rock bottom, as it has now during a punishing pandemic that led to a 10% economic contraction 2020. But Mr. Guzmán said his plan falls short of the draconian austerity measures the IMF imposed with other governments.”
“‘We are using the negotiations with the IMF as an opportunity to try to break with the patterns of the past,’” said Mr. Guzmán, a Columbia University-trained economist.”
“The twist this time around is that Mr. Guzmán and President Alberto Fernández both belong to a party that has long railed against the IMF, blaming it for Argentina’s problems. And they face a formidable opponent within the governing Peronist coalition that is marshaling lawmakers against the IMF’s belt-tightening policies.”
“Vice President Cristina Kirchner, leader of a far-left faction, calls for strong state intervention and public spending to preserve the purchasing power of Argentine workers, a policy that marked her two terms as president,” Wall Street Journal reports.
Philippine Stocks Crater After a Strong 2020 - Gulf News/Bloomberg
“Philippine stocks have rapidly gone from one of the world's best performers to the absolute worst, prompting the nation's growing pack of retail investors to shift attention to speculative penny stocks in the search for better returns.”
“The Philippine Stock Exchange Index is down 7.4% so far this year, the biggest decline among 92 global equity benchmarks tracked by Bloomberg. That's a dramatic turnaround after the gauge's 22% surge in the three months ended December saw it ranked No. 16 for that period.”
“Faced with a decline in the nation's biggest stocks amid an exodus of foreign investors and a weak economy, local individual traders are shifting to riskier plays, mirroring their global peers. U.S. retail investors have been piling cash into small caps, initial public offerings and options as the S&P 500 Index has treaded water so far in 2021.”
“‘Philippine small investors are fueling a surge in speculative stocks, flush with funds from last quarter and enabled by the growing power of internet trading platforms,’ according to Conrado Bate, president of COL Financial Group Inc., the nation's biggest online stock broker,” Gulf News/Bloomberg report.