Emerging Markets Daily - July 22
China Yuan Rising, EM Stocks and Currencies Recover After Recent Falls, Saudi Oil Policy, Russia's Gateway to China, Egypt Seeks China Mediation on Nile Dam
The Top 5 Emerging Markets Stories from Global Media - July 22
China’s Yuan to Become More Influential Part of Global Financial System
South China Morning Post / Reuters
“The Chinese yuan is on course to become a much more influential part of the global financial system with almost a third of central banks planning to add the currency to their reserve assets, a closely followed survey showed.”
“The Global Public Investor survey, published annually by the London-based OMFIF think tank, showed 30 per cent of central banks plan to increase yuan holdings over the next 12-24 months, compared with just 10 per cent last year.”
“It comes despite the differences between Western governments and China on the global stage. The yuan’s rise will almost certainly be a global trend, but may be especially strong in Africa where almost half of central banks are planning to increase their yuan reserves.” Reuters reports
Emerging Markets Stocks, Currencies Recover After Recent Falls
Reuters
“Emerging market stocks and currencies recovered from recent falls on Thursday on optimism over the second-quarter earnings season, with South Africa's rand up 0.4% ahead of a central bank meeting.”
“MSCI's index of emerging market (EM) stocks .MSCIEF jumped 1% and was headed for its best day since early June. The index had lost as much as 2.6% this week, before arresting its fall late Wednesday.”
“Improving sentiment over the second-quarter earnings season helped investors look past possible economic ructions caused by a rise in global COVID-19 cases, fears of which had spurred sell-offs in recent sessions.”
“MSCI's currency index .MIEM00000CUS jumped 0.3% and was set for its best day in nearly a month, with most EM currencies benefiting from a dip in the dollar and other safe havens.” Reuters reports.
The Saudi Prince of Oil Prices Vows to Drill ‘Every Last Molecule’
Bloomberg
“…They also reflected what Abdulaziz sees as his destiny: to ensure that the last barrel of oil on the face of the Earth comes from a Saudi well. As he said in June during a private event organized by Bank of America Corp., according to a person familiar with the meeting, ‘We are still going to be the last man standing, and every molecule of hydrocarbon will come out.’”
“All of this has huge implications for the world’s energy markets at a time when, in erecting a fortress to safeguard oil, Abdulaziz and Saudi Arabia seem to be on the wrong side of history. Abdulaziz, the first member of the royal family to be the kingdom’s energy minister, is the most important single person in the oil market today. As influential in global economic terms as some central bankers, he has repeatedly taken bold, successful steps to control the markets, manage the flow of oil supplies, and shore up prices.”
“But a rancorous OPEC+ meeting in July showed just how difficult it’s going to be for Abdulaziz to consistently get his way in an era when oil-producing nations—their self-interests often in conflict—are contemplating a future of declining oil consumption. By the time OPEC+ ministers convened over videoconference, resurgent demand had already pushed crude prices up 50% this year. When the talks collapsed, oil prices jumped to the highest level in more than six years.” Javier Blas reports
Russian Gateway to China Eyes 'Friendship' Dividends after COVID
Nikkei Asia
“As the sun dips below the horizon, Russians out for an evening stroll in the city of Blagoveshchensk often stop to gaze at the tall red-lit buildings with enormous Chinese characters on the other side of the Amur River.”
“The Chinese city of Heihe lies just 750 meters across the water. Citizens of the two countries frequently gather on opposite riverbanks to watch motorboats race by, some flying Russian flags and others Chinese.”
“So when Russia and China marked the 20th anniversary of their Treaty of Friendship on July 16 -- a pact they say has brought relations to the "highest level in history" -- the milestone carried special significance for Blagoveshchensk. Decades removed from violent episodes and tensions that brought the two nuclear powers to the verge of war, the city has sought to reinvent itself as a gateway to the world's No. 2 economy.”
“The reinvention comes amid growing signs of Russia and China drawing closer as their relations with the West sour. Some of Blagoveshchensk's larger aspirations, however, remain frozen in time by COVID-19.” Dimitri Simes Jr. and Tatiana Simes report
Egypt Hopes China can Break Deadlock in Nile Dam Dispute
Al-Monitor
“Egypt is following a new policy course on the Grand Ethiopian Renaissance Dam (GERD) in latest bid to get Ethiopia to agree to sign a legally binding deal on the dam. Cairo is approaching Ethiopia's closest allies, starting with China.”
“During a meeting with Chinese Foreign Minister Wang Yi in the northwestern coastal city of Alamein on July 18, Egyptian President Abdel Fattah al-Sisi said, ‘Egypt is unwavering in its determination to protect its historical right to its water share from the Nile.’”
“Egypt, which took the dam issue to the United Nations Security Council on July 8, objected to the second-stage filling of the dam and accused Ethiopia of acting unilaterally and overlooking Egyptian concerns about the effects the disruption in the flow of the Nile would have on its people.”
“Political observers in Egypt say that China could play an important role in settling the crisis over the Ethiopian dam.”Amr Emam reports