Emerging Markets Daily - July 13
EM Investment Slows, Haiti on Brink of Anarchy, M-KOPA Expands into Nigeria, South Africa Protests, Chinese Companies Corralling Land Around World
The Top 5 Emerging Markets Stories from Global Media - July 13
EM Investors In Wait-and-See Mode Amid Developed Markets Recovery
Pensions and Investments
“Emerging markets have become a victim of China's success in 2020, with money managers and investors now underweight and pulling assets from equity and debt allocations as they watch and wait for better times to resume.”
“The recovery in the U.S. dollar, an increase in safe-haven asset yields in the first quarter and China's tighter monetary policy have contributed to the underperformance of emerging market assets vs. developed market assets so far in 2021.”
“On top of that, developed markets continue to ride the vaccine- and stimulus-induced wave of positive performance, marking these regions' recoveries and setting them further apart from emerging markets.”
“Emerging markets equity funds tracked by data provider EPFR ended the second quarter of 2021 with a three-week run of outflows. For the second quarter, net inflows dropped to $15.9 billion, following $68.4 billion in net inflows for the first quarter of 2021 and $44 billion in net inflows for the fourth quarter of 2020, according to EPFR.”
“As of June 25, emerging markets bond funds saw an 11-week run of inflows come to an end as they posted their biggest weekly outflow since early March, according to EPFR. Figures were not available. At the end of the second quarter, investors had pumped $13 billion in net inflows to emerging markets bonds funds. That followed $11 billion in net inflows in the first quarter of 2021 and $45 billion in net inflows in the fourth quarter of last year.” Pensions and Investments reports.
Haiti on Brink of Anarchy Amid Hunger, Gang Violence and Power Vacuum
The Wall Street Journal
“Nearly half of the population on this island nation is facing acute hunger, while gang members block fuel distribution routes to the capital and scare away tourists from pristine beaches. In contrast to neighboring countries, Haiti has yet to administer a single vaccine against Covid-19.”
“A country that for much of its history has been stifled by poverty and strife is now mired in its worst crisis in a generation after President Jovenel Moïse was assassinated in his home last week in a murky attack the police blame on two dozen foreign mercenaries and a 63-year-old doctor they say wanted to be president.”
“Though Claude Joseph, the interim prime minister, says he is Haiti’s rightful leader, the Biden administration on Monday appeared to distance itself from him after a U.S. delegation traveled to the island over the weekend.” Kejal Vyas reports
M-KOPA Expands into Nigeria
African Business
“Kenya’s M-KOPA, which offers underbanked customers finance to acquire solar lighting, smartphones, TVs and domestic appliances, is expanding into Nigeria after a successful pilot project.”
“M-KOPA, which means ‘to borrow’ in Swahili, is making the leap into West Africa after previously operating in Kenya and Uganda.”
“…The firm started out as a pay-as-you-go solar power provider to off-grid homes a decade ago, but in 2019 expanded into smartphone finance and now offers customers access to 4G devices. The firm brands itself as a ‘connected asset financing platform’.”
“To date, M-KOPA says it has provided over $400m in financing and sold over 1 million pay-as-you-go solar systems and 500,000 smartphones to customers in Kenya, Uganda and Nigeria.” David Thomas reports
Deadly Protests Cast Pall Over South Africa’s Economic Recovery
Bloomberg
“Violent protests have dealt a body blow to South Africa’s efforts to rebuild the economy in the wake of the coronavirus pandemic and pose the sternest test yet to President Cyril Ramaphosa’s authority.”
“The widespread looting and social unrest that’s followed the imprisonment of former President Jacob Zuma is damaging business confidence, has disrupted key trade routes and seen businesses from banks and supermarkets to small-time traders shutting their doors. The army has been deployed to help police quell the unrest, which has claimed the lives of 10 people and seen almost 500 arrested.” Antony Sguazzin reports
Chinese Companies Corralling Land Around the World
Nikkei Asia
“China's strategic muscle-flexing is not limited to its expansive maritime claims and vigorous infrastructure exports; Chinese entities have also been aggressively acquiring land overseas.”
“Chinese companies are buying up land in Asia and Africa. The combined area of land purchased or leased by such companies over the past decade is equal to the total land area of Sri Lanka or Lithuania and much larger than acquisitions by their counterparts in the U.S. and other major countries.”
“Concerns are growing that emerging and developing countries, as sources of supply for food and natural resources, will fall under China's sway. The security implications are worrying as well.” Daishi Chiba, Shin Watanabe, and Yuichi Nitta report
