Emerging Markets Daily - January 8
Nazarbayev on the Run, Kazakh Protests Rock Bitcoin, Microsoft CEO Invests in Indian Start-up Groww, Africa's Cannabis Industry, Ship Container Prices Keep Rising
The Top 5 Stories Shaping Emerging Markets from Global Media - January 8
Nazarbayev -’Leader of the Nation’ - On the Run as Kazakh Protests Grow
“Various speculation has Nazarbayev and other members of his immensely wealthy clan—such as his son-in-law and business oligarch Timur Kulibayev—in Switzerland, Russia or China, or perhaps in Abu Dhabi, or even only over the border from Kazakhstan in Kyrgyzstan as an interim temporary home.”
bne IntelliNews
“By all accounts, Kazakhstan’s ‘Elbasy’, or ‘Leader of the Nation’, Nursultan Nazarbayev, fled abroad in panic after simmering anger at the corruption and poverty inflicted on the ordinary people of the oil-rich state boiled over this week.”
“The country’s post-Nazarbayev era has truly begun and those of the regime remaining in power will attempt to erase any linkages with the great (now not-so-great) man. How long can the name of the capital, three years ago renamed Nur-Sultan in his honour, survive?”
“Various speculation has Nazarbayev and other members of his immensely wealthy clan—such as his son-in-law and business oligarch Timur Kulibayev—in Switzerland, Russia or China, or perhaps in Abu Dhabi, or even only over the border from Kazakhstan in Kyrgyzstan as an interim temporary home.”
“But Switzerland was on January 6 the bet of the Almaty correspondent of bne IntelliNews, who said: ‘Nazarbayev’s name has disappeared from reporting in the last two days; [he] fled the country on January 5 and is now believed to be in Switzerland. Officially Tokayev now holds all the levers of power,’ he added, referring to Nazarbayev’s handpicked successor Kassym-Jomart Tokayev, who became president in 2019.”
“Around the time of Nazarbayev’s apparent departure from Kazakhstan, Tokayev stripped his 81-year-old predecessor of his role as head of the State Security Committee, the successor to the Soviet-era KGB. In the three years since he handed over the presidency to Tokayev, 68, most people in the country of 19mn have remained suspicious that Nazarbayev, who boasts full immunity from prosecution in his homeland, has remained in control of Kazakhstan from behind the scenes.”
“…The reputation of Nazarbayev, however, looks irreparably damaged. Not even ex-UK prime minister Tony Blair—who pocketed a small fortune by giving ‘public relations advice’ to Nazarbayev, even after Kazakh security forces in 2011 shot dead 14 people in a showdown with oil workers demanding better pay—would likely take on the task of restoring it.”
“The chant of ‘Shal ket!’ or ‘Leave, old man!’ was heard rising from many a rally as anti-regime sentiment in Kazakhstan ignited following the lifting of a price cap on vehicle fuel at the start of the new year. Whatever ‘personality cult’ sway Nazarbayev held over Kazakhs during certain phases of his long rule appears well and truly dissolved.” bne IntelliNews reports.
Bitcoin Prices Fall as Kazakh Protests Halt Mining in Major Global Hub
Nikkei Asia
“Bitcoin prices have dropped more than 10% in recent days as widespread protests rock Kazakhstan, one of the world's top hubs for cryptocurrency mining. Bitcoin hovered around the $42,000 mark late Friday night here, down from over $48,000 at the end of 2021, according to CoinDesk.”
“New bitcoins enter into circulation as a reward to miners for solving complex mathematical problems. The hash rate, which measures the total computing power used for mining, plunged Wednesday after the Kazakh government ordered a leading telecommunications provider to cut internet access across the country.”
“The shutdown came in a response to deadly protests over surging prices of liquefied petroleum gas, used as a fuel by many motorists in Kazakhstan. But internet access is also needed for bitcoin mining and transactions. The hash rate was down 15% from the start of the year as of Thursday.”
“Many cryptocurrency miners had moved to Kazakhstan to take advantage of cheap electricity there after neighboring China, then another leading hub, banned them in May 2021. Kazakhstan was responsible for about 18% of the global hash rate as of August, second only to the U.S., according to the Cambridge Center for Alternative Finance.”
“A protracted internet blackout could force bitcoin miners in Kazakhstan to close shop or move elsewhere. ‘Speculation that these operators could then unload bitcoins triggered a chain of selling,’ said the head of a major Japanese virtual currency exchange.”
“The situation in Kazakhstan has highlighted how geopolitical risks can affect bitcoin, even though it is not issued or backed by any government. Political and societal factors are only expected to play a greater role in the cryptocurrency market, with El Salvador making bitcoin legal tender and Iran and Russia doubling down on bitcoin mining as a way to earn foreign currency.” Nikkei Asia reports.
Microsoft CEO Satya Nadella Invests in Indian Fintech Start-up Groww
LiveMint India
“India's online investment platform Groww on Saturday announced that Chairman and CEO of Microsoft Corporation Satya Nadella has joined the company as an investor and advisor.”
“‘Groww gets one of the world’s best CEOs as an investor and advisor. Thrilled to have @satyanadella join us in our mission to make financial services accessible in India,’ Groww CEO Lalit Keshre tweeted today morning.”
“The company is yet to reveal details regarding the financial part of Satya Nadella's induction. In October 2021, Groww raised USD 251 million (around ₹1,885 crore) in a funding round led by Iconiq Growth, at a valuation of USD 3 billion.”
“The series E funding round also saw participation from investors like Alkeon, Lone Pine Capital and Steadfast. Groww's existing investors Sequoia Capital, Ribbit Capital, YC Continuity, Tiger Global, and Propel Venture also participated.” LiveMint reports.
Record Legal Shipment Nudges Africa Toward $7 Billion Cannabis Market
African Business
“Canada-based Instadose Pharma Corp completed a world record shipment of 2.125 tonnes of medicinal cannabis from South Africa to North Macedonia on 25 December 2021, according to a statement released by the company, boosting hopes that the African cannabis market will be worth over $7bn annually by 2023.”
“A 2020 report by Prohibition Partners estimates that the bulk of the market will reside in five countries: Nigeria ($3.7bn), South Africa ($1.7bn), Morocco ($900m), Lesotho ($90m) and Zimbabwe ($80m), if the necessary legislation is introduced.”
“However, according to Sibusiso Xaba, co-founder and CEO of the Africa Cannabis Advisory Group, writing on bizcommunity.com, the most significant recent developments have been in South Africa, the market that he expects to be the largest by revenue.”
“According to Xaba, over 15 tonnes of legal cannabis were exported by the continent to the rest of the world in 2021, representing a tenfold increase on 2020, with South Africa, Lesotho and Uganda among the main exporters.”
“Despite industry concerns about regulation, he says that progress in South Africa is ‘undeniable’. The country produced a cannabis master plan and has taken steps to allow the commercial cultivation of hemp, a botanical class of cannabis that contains less THC, the psychoactive compound that causes a ‘high’.
World Container Index Posts 5th Straight Weekly Rise
Drewry/Hellenic Shipping News
“Drewry’s composite World Container Index increased 1.1% to $9,408.81 per 40ft container this week. The composite index increased by 1.1% this week, and, remains 80% higher than a year ago.”
“The average composite index of the WCI, assessed by Drewry for year-to-date, is $9,409 per 40ft container, which is $6,574 higher than the five-year average of $2,835 per 40ft container.”
“After a steady decrease in rates on transpacific lanes since mid-September 2021, we now see the rates increasing for the 5th consecutive week. Freight rates from Shanghai – Los Angeles and Shanghai – New York gained 3% each to reach $10,520 and $13,518 per 40ft box respectively. Similarly rates from New York – Rotterdam surged 5% or $57 to reach $1,244 per feu.”
“However, rates from Los Angeles – Shanghai fell 1% to reach $1,290 per 40ft container. Rates on Shanghai – Rotterdam, Rotterdam – Shanghai, Shanghai – Genoa and Rotterdam – New York hovered around previous weeks level. Drewry expects rates to climb higher in the coming week on account of Chinese New Year.”
Drewry reports.
“To see a World in a Grain of Sand
And a Heaven in a Wild Flower,
Hold Infinity in the palm of your hand
And Eternity in an hour.”
― William Blake, Auguries of Innocence