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Emerging Markets Daily - July 16
Demographic Meltdowns in Russia and Ukraine, S. Africa Unrest Worries Investors, China Spy Agency Targets Didi, Saudi PIF and COSCO Buy Red Sea Terminal Stake, Xiaomi Overtakes Apple
The Top 5 Emerging Markets Stories from Global Media - July 16
Demographic Disaster in Russia, Catastrophe in Ukraine
“Russia is facing two decades of stagnation thanks to its shrinking population as a huge dent knocked into the demographic pyramid during the chaos of the 1990s arrives in the working population cadres. But if Russia’s demographics are a disaster, those of Ukraine are a catastrophe. After the collapse of the Soviet Union, at its lowest point Russia’s population fell to the same level as in 1985. By comparison Ukraine’s population has collapsed and has recorded a count last seen in 1959. It has given up about two thirds of all its population growth following WWII.”
“As bne IntelliNews reported in the “Putin’s babies” feature, Russia’s population was expected to collapse from 144mn in 2000 to as little as 77mn by 2020, as it was losing 750,000 people a year. But what happened was the Mother and Child reforms introduced by Russian President Vladimir Putin in 2006 stopped the rot and reversed the trend.”
“Russia’s population enjoyed a decade of growth that only came to an end in 2018 as the demographic dent arrived in the working population, and the various crises in recent years have depressed birth rates and immigration again, although mortality rates continue to fall, while life expectancy is maintaining its rise.”
“Russia’s population has started to shrink again but the UN’s optimistic forecast for 2050 is for the population to shrink modestly from the current 148mn to 144mn, although the pessimistic prediction is for a more severe contraction to 125mn.”
“By contrast, Ukraine’s population has undergone uninterrupted collapse since 1991, falling from a peak then of 51.9mn to the current 41.9mn, according to the official Ukrstat numbers. And even that number is in doubt. Ukraine’s population fell behind that of Poland for the first time as an electronic census revealed the number of citizens had dropped by some 5mn people to 37.289mn in 2020 since the last census in 2000.” Ben Aris reports.
South Africa Unrest Worries Investors
“As violent unrest grips South Africa, economists warn that prolonged insecurity could threaten the country’s investment climate and cause further economic disruption amid a third wave of the pandemic.”
“Last week the jailing of former president Jacob Zuma sparked protests mainly concentrated in his home province of KwaZulu-Natal. By Tuesday protests had escalated into riots and looting across the country, including the commercial capital Gauteng and Durban, prompting the government to deploy the military in some provinces.”
“As the situation continues to deteriorate, the government has threatened rapid prosecution of those arrested and ‘community dialogues,’ triggering calls from the business community for a more heavy-handed approach.”
“‘The cycle of wide scale impunity must be broken through overwhelming and rapid deployment of security force,’ says Peter Attard Montalto, director of capital markets research at Intellidex, a South African research and consulting company. ‘The scale of the number of looters in places like Soweto does not lend itself to normal riot policing.’”
“Footage filmed from a helicopter on Thursday showed the wreckage of a Johannesburg mall which was ransacked and set alight, while local residents allegedly carried off furniture, electrical appliances and clothes.” Shoshana Kedem reports.
China State Spy Agency Swoops in on Didi for Security Probe
“China’s powerful state spy agency and six other government departments have taken the unusual step of stationing investigators in the offices of Didi Chuxing to conduct a security probe of the ride-hailing group.”
“The review, which sent Didi’s share price plunging when it was first announced after the company’s $4.4bn US initial public offering earlier this month, marks the first time the secretive Ministry of State Security has publicly announced it will temporarily base staff inside a company.”
“The Cyberspace Administration of China, the regulator in charge of co-ordinating the cyber security review on Didi, said on Friday the probe would also involve the police, tax authorities, the market competition regulator, as well as industry regulators for natural resources and transport. ‘The announcement of which agencies are involved is a warning shot to other companies that you don’t mess with national security but it’s also an attempt by Beijing to make the review process more transparent,’ said Feng Chucheng, tech analyst at consultancy Plenum.ai.”
“The scale of the investigation into Didi, which the CAC announced two weeks ago, is likely to further frighten investors in Chinese tech stocks and dampen appetite for the country’s offshore IPOs.”
“The CAC followed up the security review into Didi with a raft of punitive measures that sent its share price down 20 per cent over the week following its IPO. The agency also proposed new rules banning companies with more than 1m users from listing abroad until they had received official permission after undergoing a security review.” Yuan Yang reports.
Saudi PIF and China’s COSCO Buy 40% Stake in Red Sea Terminal
“Saudi Arabia's sovereign wealth fund, the Public Investment Fund, and Hong Kong-based Cosco Shipping Ports completed the acquisition of a 40 per cent stake in the Jeddah-based Red Sea Gateway Terminal.”
“The two entities each bought a 20 per cent share in the company that owns the terminal for $280 million. Saudi Industrial Services Company has sold a 21.2 per cent stake for 556.5 million Saudi riyals ($148.4m), it said in a separate statement. However, it will retain a 36.36 per cent shareholding in the terminal operator.”
“The transaction will bring global shipping expertise through Cosco to the Jeddah-based operator and help boost its business volumes, RSGT said in a statement. ‘Both new shareholders will help drive future growth on seaside and landside logistics,’ the company said in a statement.”
"‘Working closely with PIF and CSPL, we will accelerate our shared vision, further strengthen our customer offering, and elevate our mandate to meet the increasing demand for terminal and logistics services,’ said Jens Floe, chief executive at RSGT.” Jennifer Gnana reports.
Xiaomi Overtakes Apple To Become Second Biggest Phonemaker
“Xiaomi Corp. has become the world’s second biggest smartphone maker over the past quarter following an 83% jump in shipments, according to preliminary estimates by Canalys.”
“This marks the first occasion that Xiaomi, the Chinese maker of everything from rice cookers to gaming monitors, has broken into the top two, historically dominated by Samsung Electronics Co. and Apple Inc. Samsung had a 19% share in the second quarter, Xiaomi had 17% and Apple was at 14%, according to the research firm’s data. Shares of Xiaomi rallied as much as 4.1% on Friday, the best performer on Hong Kong’s benchmark Hang Seng Index.”
“Huawei Technologies Co. had briefly disrupted the rankings, until sanctions cut it off from essential chip supplies last year. Its withdrawal from the highly competitive smartphone market pushed other Chinese vendors to spend aggressively on new hardware and upgrades.”
“Xiaomi was particularly active, launching two flagship devices within the first four months of the year. Its Mi 11 Ultra device features one of the largest camera sensors in a smartphone to date, underscoring the firm’s ambition to push up into the premium pricing range.” Vlad Savov reports.