Emerging Markets Daily - July 28
Mondelez Sees EM Growth, Facebook's Asia Strategy, New North and South Korea Talks, Balkan Trio Pushes for 'Mini-Schengen', Surging Coffee Bean Prices
The Top 5 Emerging Markets Stories from Global Media - July 28
Mondelez, Maker of Toblerone and Oreo’s, Hungry for More EM Growth
Reuters
“Mondelez International Inc raised its full-year organic revenue forecast on Tuesday, as more consumers snacked on the food giant's Oreo cookies and Cadbury chocolates across emerging markets including Brazil and China.”
“Demand for the Toblerone maker's biscuits and snacks has picked up across India, Russia and other emerging markets which struggled to pull in sales last year while pandemic-led curbs kept people at home.”
"‘Mobility is increasing as restrictions ease, but at-home consumption remains elevated and it appears that higher levels of working from home and shopping online are here to stay,’ Chief Executive Officer Dirk Van de Put said on a call.”
“Mondelez is now doubling down on emerging markets by ramping up capacity and increasing production lines rather than opening new facilities, aiming to save costs. Its emerging markets segment brought in $2.29 billion in the second quarter, nearly 20% higher than last year.”
“However, shares of the Trident gum maker fell about 2% after market as the company left its full-year profit forecast unchanged. Mondelez has been facing inflationary pressures, though it plans to counter rising raw material costs by increasing product prices and reducing packaging expenses.” Admit Sebastian reports.
The Perils of Facebook's Asia Strategy
Nikkei Asia
“…as the world's largest social media platform looks to the prodigious customer numbers in Asia to combat its decline in the West, it finds itself walking a tightrope: On one side is its declamatory stand on free speech, on the other its willingness to aid in censorship and disinformation to stay in promising markets.”
“In the last five years, Facebook’s monthly active users in the region have more than doubled to 1.2 billion, compared with an increase of about 17% in North America to 259 million.”
“…Asia's markedly different languages, cultures and political systems, and the clashes between its principles and some of the region's autocratic regimes, have made it difficult to expand and monetize its user base. Critics say that in many cases, the world's largest social media platform has compromised on its community standards - internal policies defending free expression and cracking down on misinformation and abuse - in an effort to access commercial opportunities in the region.” Yifan Yu, Kiran Sharma, Lien Hoang, Cliff Venzon, and Erwida Maulia report
North, South Korea in Talks over Summit, Reopening Liaison Office
Reuters
“North and South Korea are in talks to reopen a joint liaison office that Pyongyang demolished last year and hold a summit as part of efforts to restore relations, three South Korean government sources with knowledge of the matter said.”
“South Korean President Moon Jae-in and North Korean leader Kim Jong Un have been exploring ways to improve strained ties by exchanging multiple letters since April, the sources said on condition of anonymity due to diplomatic sensitivity.”
“Inter-Korean talks could also help restart stalled negotiations between Pyongyang and Washington aimed at dismantling the North's nuclear and missile programmes in return for sanctions relief.” Hyonhee Shin reports
Balkan Trio Push ‘Mini-Schengen’ as they Hit out at EU Membership Delay
Financial Times
“The leaders of Serbia, Albania and North Macedonia have hit out at Brussels over the slow pace of EU enlargement, vowing to press ahead with their own border-free travel and business zone as they wait for the bloc to admit them.
“‘We know there’s enlargement fatigue in the EU,’ Alexander Vucic, Serbia’s president, said in an interview. ‘We need to see what we can do for ourselves [instead], what we can do for our people, how we can expand our markets.’”
“Zoran Zaev, prime minister of North Macedonia, expressed frustration that ‘the EU does not deliver’ on its promises, adding: ‘We need to accelerate practical benefits to our citizens.’”
“The Serbian leader said the Balkan region could no longer wait for the EU to unify it, having grappled with ethnic and religious conflicts and economic underachievement since the former Yugoslavia broke apart after 1991.” Marton Dunai and Valentina Pop report
Coffee Bean Prices Surge to Six Year High on Historic Brazil Drought
“The worst frost to strike Brazil’s coffee-growing region in more than 25 years is set to cut a chunk out of next year’s crop, sending prices of the bean to six-year highs on global markets.”
“The cold snap is the second weather shock in recent months to strike farmers in Brazil, the world’s biggest coffee producer, threatening to drive up costs at cafes and breakfast tables around the world. Before the frost came a drought that parched the 2021 crop.”
“Traders are spooked by the prospect of another lackluster harvest in a year’s time, and on Monday pushed futures for arabica beans up to $2.08 a pound, their highest level in New York since late 2014. Though they fell on Tuesday, coffee futures have climbed almost 30% in July and nearly doubled over the past year, snapping a yearslong stretch of depressed prices that prompted many farmers to abandon their fields.”
“The frost-induced rally is one of a series of steep moves in commodity markets caused by extreme or unusual weather. Lumber prices jumped last week when forest fires raging in the West threatened a swath of U.S. wood supply. Floods in northwest Europe snarled the flow of commodities and goods such as chemicals along the River Rhine, an industrial thoroughfare. Plunging mercury in Texas led to a spike in natural-gas and power prices in February.”
“Investors, meanwhile, are trying to gauge the ability of companies to pass on higher prices for materials like copper, PVC and coffee to consumers. Starbucks Corp. on Tuesday reported stronger-than-expected quarterly earnings and sales. Nestlé SA is slated to report results on Thursday.” Jeffrey T. Lewis and Joe Wallace report.
What We’re Also Reading…
Turkey Resumes Trade That Made It Europe’s Top Trash Destination
Bloomberg
“Turkey is reversing a short-lived ban on imports of some plastic waste, prompting environmental groups to warn of the threat posed to farmlands, air and water resources in what was Europe’s top destination for trash.”
“In the five years leading up to the ban, Turkey received more garbage from Europe than any other country. While it’s supposed to be mostly recycled, images of garbage piled in fields earlier this year sparked a public backlash, with Turkish importers accused of illegally dumping thousands of tons of trash.”
“…Turkey’s imports of plastic waste jumped nearly 200 times from 2004, with much of the increase in the last four years after China announced it was stopping the practice. The U.K. exported 210,000 tons of plastic waste to Turkey in 2020, while Germany sent 136,000 tons.” Burhan Yuksekkas reports
40% of Children in Eastern and Southern Africa are Not in School
UNICEF
“UNICEF estimates that 40 per cent of all school-aged children across Eastern and Southern Africa are currently not in school due to COVID19-induced closures and pre-pandemic levels of out of school children.”
“Across the region, we are seeing re-closing of schools mid-year due to recent COVID-19 surges, with over 32 million children estimated to be out of school because of pandemic closures or having failed to return once their schools opened earlier this year. That is in addition to an estimated 37 million children who were out of school before the pandemic.”
“…Some African children have had access to online learning, but millions have little or no access to the internet, computers or phones. In addition, going to school not only offers the basic learning needed to help break the cycle of poverty, it also provides protection from harmful practices such as early marriage, pregnancies, or abuse at home or on the streets, and can ensure a daily, nutritious meal.” UNICEF reports
