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Emerging Markets Daily - June 18
Indonesia's Looming Covid Surge, Possible Biden-Xi Talks Sparks HK Rally, Maduro Seeks Deal With Biden, US General Says China Invasion of Taiwan Not Imminent, India Third Wave Covid
The Top 5 Emerging Markets Stories from Global Media - June 18
Rising Covid Cases Threaten Deadly Surge in Indonesia
Wall Street Journal
“As Covid-19 cases rise sharply in parts of Indonesia, authorities have found the highly contagious Delta variant of the coronavirus to be dominant in areas including the capital, Jakarta.”
“Doctors there say hospitals are filling up, more young people are getting infected and patients are getting sicker more quickly than in previous outbreaks.”
“Their observations echo some of the anecdotal findings from India, where the variant was first detected and contributed to a devastating wave of infections. The strain, also known as B.1.617.2, is in around 70 countries including the U.K., where health officials believe it is contributing to an uptick in cases and hospitalizations, delaying a planned easing of Covid-19 restrictions.”
“In three parts of Indonesia where the variant is prevalent—densely populated Jakarta; Kudus, a cigarette-manufacturing center in central Java province; and Bangkalan, just off the coast of Java—sudden spikes in infection have strained hospitals and sparked worries that a new wave of infections will sweep across Indonesia. Kudus experienced one of the fastest surges of all, with the weekly tally of new infections jumping 35 times in late May, though from a very low base.” Jon Emont reports.
Possible Biden, Xi Talks Sparks Hong Kong Shares Rally
South China Morning Post
“Hong Kong stocks rose on Friday for the second day this week buoyed by technology shares tracking rallies on Wall Street, after the White House signalled direct talks between US President Joe Biden and Chinese President Xi Jinping were on the cards.”
“The Hang Seng Index rose 0.9 per cent to 28,801.27 on Friday, but ended the week 0.1 per cent lower. This week was its third consecutive week of losses. On the mainland, the Shanghai Composite Index was almost flat at 3,525.10, leading to a 1.8 per cent decline for the whole week. The benchmark also recorded a third straight weekly decline.”
“The White House has said direct talks between Biden and Xi could be held as early as next month, after the US president’s meetings with Russian President Vladimir Putin this month. The meeting could continue to boost investor sentiment, which has been dented by a recent ratcheting up of pressure on China by the North Atlantic Treaty Organization and G7 countries.”
“The Hang Seng Tech Index gained 1.8 per cent on Friday, with technology stocks in Hong Kong rebounding from their lowest level in almost a month. They were down earlier because of regulatory risks and US Federal Reserve policy uncertainties.”
“JD.com advanced 3.8 per cent after transactions on its platform rose by more than 10 times year on year during the first three minutes of its 618 promotion on Friday. The promotion started at midnight. Meituan added 3.7 per cent. Alibaba Group Holding, which owns this newspaper, gained 1.2 per cent.”
“Sportswear firms and automobile stocks also gained. Anta Sports Products was among the biggest winners, up 6.3 per cent, while 361 Degrees International advanced 5.7 per cent and Li Ning added 2 per cent. BYD Company rose 4.9 per cent and Geely Auto gained 5.3 per cent.” Iris Ouyang reports.
As Economy Craters, Defiant Maduro Quietly Seeks Deal With Biden
“Seated on a gilded Louis XVI chair in his office at Miraflores, a sprawling, neo-Baroque palace in northwest Caracas, Venezuelan President Nicolas Maduro projects unflappable confidence.”
“The country, he says in an 85-minute interview with Bloomberg Television, has broken free of ‘irrational, extremist, cruel’ U.S. oppression. Russia, China, Iran and Cuba are allies, his domestic opposition is impotent. If Venezuela suffers from a bad image, it’s because of a well-funded campaign to demonize him and his socialist government.”
“The bombast is predictable. But in between his denunciations of Yankee imperialism, Maduro, who’s been allowing dollars to circulate and private enterprise to flourish, is making a public plea and aiming it directly at Joe Biden. The message: It's time for a deal.”
“Venezuela, home to the world’s largest oil reserves, is starved for capital and desperate to regain access to global debt and commodity markets after two decades of anti-capitalist transformation and four years of crippling U.S. sanctions. The country is in default, its infrastructure crumbling and life for millions a struggle for survival.”
“‘If Venezuela can’t produce oil and sell it, can’t produce and sell its gold, can’t produce and sell its bauxite, can’t produce iron, etcetera, and can’t earn revenue in the international market, how is it supposed to pay the holders of Venezuelan bonds?’ Maduro, 58, says, his palms upturned in appeal. ‘This world has to change. This situation has to change.’”
“Once the richest country in South America, Venezuela is now among the poorest. Inflation has been running at about 2,300% a year. By some estimates, the economy has shrunk by 80% in nine years -- the deepest depression in modern history.”
“Signs of decay are everywhere. At the foreign ministry in downtown Caracas, most of the lights are turned off and signs on the bathroom doors say, ‘No Water.’ Employees at the central bank bring their own toilet paper.” Bloomberg reports.
Top US General Dismisses Warnings of Imminent China Invasion of Taiwan
“America’s most senior general has dismissed warnings of an imminent Chinese invasion of Taiwan, insisting that the People’s Liberation Army was not yet capable of annexing the island.”
“‘I think China has a ways to go to develop the actual, no-kidding capability to conduct military operations to seize, through military means, the entire island of Taiwan, if they wanted to do that,’ General Mark Milley, chairman of the joint chiefs of staff, told a Senate appropriations committee hearing.’”
“Milley added that he thought China had little intention to take Taiwan by force. ‘There’s no reason to do it militarily, and they know that. So, I think the probability is probably low, in the immediate, near-term future.’ His assessment contrasts with the warning issued in March by Admiral Philip Davidson, then commander of US forces in the Pacific, who told lawmakers during a hearing that China might attack Taiwan in the next six years.”
“Admiral John Aquilino, Davidson’s successor, said a Chinese attack on Taiwan could be launched ‘much closer to us than most think’. A senior US government official also told the Financial Times there was concern that President Xi Jinping viewed progress in unifying Taiwan with China as important to his quest for a third term in office.”
“Over the past year, the Chinese military has sharply raised the pressure on Taipei, such as flying aircraft into Taiwan’s air defence identification zone. Since Taiwan first announced the incursions in September last year, People’s Liberation Army Air Force aircraft have entered the buffer zone 20 days a month on average. The participation of fighters and bombers in these flights has steadily risen, peaking at 44 fighters in April.” Kathrin Hille reports.
Third Covid Wave Likely to Hit India by October, Experts Say
“A third wave of coronavirus infections is likely to hit India by October, and although it will be better controlled than the latest outbreak the pandemic will remain a public health threat for at least another year, according to a Reuters poll of medical experts.:
“The June 3-17 snap survey of 40 healthcare specialists, doctors, scientists, virologists, epidemiologists and professors from around the world showed a significant pickup in vaccinations will likely provide some cover to a fresh outbreak.”
“Of those who ventured a prediction, over 85% of respondents, or 21 of 24, said the next wave will hit by October, including three who forecast it as early as August and 12 in September. The remaining three said between November and February.”
“But over 70% of experts, or 24 of 34, said any new outbreak would be better controlled compared with the current one, which has been far more devastating - with shortage of vaccines, medicines, oxygen and hospital beds - than the smaller first surge in infections last year.” Reuters reports.