Emerging Markets Daily - June 22
South America Hit Hard by Covid, Indonesia Stocks, Iran New President: Nuclear Talks to Continue, Covid in Shenzhen Port Hits Supply Chains, South Sudan Turns 10, Armenia Election and more...
The Top 5 Emerging Markets Stories from Global Media - June 22
South America is Now World’s Largest Covid-19 Hot Spot
The Wall Street Journal
“While Covid-19 is receding in much of the world, the pandemic is raging in South America, which has just 5% of the world’s population but now accounts for a quarter of the global death toll.”
“Almost a million people have died across 12 countries in the region. Amid another devastating surge, Brazil surpassed 500,000 this past weekend, with the virus killing seven times as many people per capita each day than in hard-hit India. Colombia and Argentina, which together have 95 million people, are tallying three times as many deaths each day as all of Africa. Of the 10 countries around the world with the highest daily death rates per capita, seven are now in South America. Collectively, the region’s death rate per capita is eight times the world’s rate.”
“Several factors explain why: a slow rate of vaccination, the spread of new Covid-19 variants, crowded cities, weak healthcare systems, far higher rates of obesity than in Africa and Asia, and some governments that largely gave up trying to control the virus…”
“The aftershocks of the pandemic in South America are likely to reverberate for years to come. It has pushed millions back into poverty, hobbled economies and deprived some of the most needy children of schooling for more than a year.” Samantha Pearson and Luciana Magalhaes report
Indonesia Stocks Riding High on Back of Tech Unicorn IPO Pipeline
Bloomberg
“Two blockbuster billion-dollar public offerings of tech unicorns set for later this year in Indonesia are fueling demand for affiliated stocks, sending their shares to multiyear highs.”
“Retailer PT Matahari Putra Prima has surged 929% this year while TV operator PT Elang Mahkota Teknologi gained 65% in the same period. Matahari is 4.7% owned by ride-hailing giant PT Aplikasi Karya Anak Bangsa, better known as Gojek. The company plans to go public by the end of this year after a merger. Elang Mahkota Teknologi is an investor in Microsoft Corp.-backed e-commerce company PT Bukalapak.com, which is planning to list in the U.S. and Indonesia, people familiar with the matter have said.”
“Retail investors are buying the stocks amid forecasts that the two listings could eventually boost Indonesia’s stock market capitalization by about $40 billion, according to Thendra Crisnanda, head of research at MNC Sekuritas. Individuals currently account for 60% of the total number of investors in the local market, compared with 33.8% a year ago, exchange data show.”
“Southeast Asia’s largest economy will see two of its largest home-grown unicorns offer shares to the public for the first time, boosted by the stay-at-home trend that’s lifted tech and e-commerce firms.”
“Gojek will merge with PT Tokopedia, an online shopping platform, to create an entity called GoTo with a combined value of about $18 billion before its IPO, according to people familiar with the matter. Crisnanda expects the valuation to expand to around $35 billion after the IPO.” Fathiya Dahrul reports.
Geopolitics: Iran New President Says Talks With US To Continue
S&P Platt’s
“Iran's current nuclear deal negotiating team will continue its work, hardliner President-elect Ebrahim Raisi said June 21, assuring that talks toward an agreement which could unlock sanctions on the country's oil sales would not be derailed by his victory.”
“But Raisi, who will be inaugurated in August, said ‘broken promises’ by the Trump administration had led to deep suspicions of US motives that would be difficult to overcome.”
“‘Any negotiations that guarantee our national interests will be certainly supported,’ Raisi said in his first news conference since winning the June 18 presidential election. ‘But we will not bind the economic situation of the people and their welfare with these negotiations. We will not allow exhausting negotiations. Any meeting should bring along a result [and] should have an outcome for our people.’”
“Raisi, a conservative judiciary chief, will succeed Hassan Rouhani, a more moderate president. Iran, which was OPEC's third biggest producer as recently as late 2018, pumped 2.43 million b/d of crude in May, according to the latest S&P Global Platts OPEC survey, down from a presanctions high of 3.83 million b/d in May 2018.”
“Six rounds of talks in Vienna since April between the US, Iranian and European diplomats have failed to clinch a deal so far that would revive the 2015 Joint Comprehensive Plan of Action. The JCPOA relaxes sanctions restricting Iranian oil exports in exchange for nuclear concessions.”
“Iran has insisted the US backs off sanctions first as it unilaterally withdrew from the deal in 2018 under former President Donald Trump, while the US wants Iran to return to full compliance with the JCPOA before earning sanctions relief.” Aresu Eqbali reports.
Shenzhen Port Covid Outbreak Strains Global Supply Chains
Financial Times
“Weeks of disruption at one of the world’s largest container terminals in southern China have put a huge strain on the already-stretched global shipping industry, worsening supply chain delays for manufacturers and retailers around the world.”
“Yantian terminal in Shenzhen closed for almost a week in late May after port workers tested positive for Covid-19; weeks later, productivity has only recovered to about 70 per cent of normal levels.”
“Yantian handles 13m 20-foot shipping containers a year, making it the third-largest terminal in the world. But congestion at the facility, operated by Hong Kong-headquartered Hutchison Ports, has spilled over to other nearby terminals such as Nansha and Shekou. Local authorities in the region blocked roads and closed off some business zones in a bid to stop the spread of the virus.”
“The situation exposes the vulnerability of global shipping to future delays if even relatively minor outbreaks occur in Chinese port cities. Lars Jensen, chief executive of consultancy Vespucci Maritime, said the incident highlighted the risk of an even more disastrous shutdown if the virus hit bigger ports such as Shanghai.” Harry Dempsey and Thomas Hale report.
Little to Celebrate as South Sudan Turns 10
African Business
“When South Sudan won its independence in July 2011, its streets were abuzz with hope. Boasting oil, arable land and vast livestock holdings, some optimists believed that with the right leadership the fledgling nation had the potential to become a middle-income economy.”
“After seceding from Sudan, its erstwhile foe in a decades-long civil war, Juba took with it 75% of Sudan’s oil reserves. But just two years into independence a fierce power struggle erupted between the ruling elites, plunging the nation into a brutal civil war that raged for six years.”
“A humanitarian catastrophe unfolded, with famine and fighting taking a ruinous toll on the economy and leading to at least 383,000 deaths by 2018.”
“Today, more than half of South Sudan’s 11.7m population require urgent food assistance, about 40% of the population is internally displaced or live as refugees in neighbouring countries, and more than 80% live below the poverty line.” Shoshana Kedem reports
What We’re Also Reading…
Geopolitics: Armenia's Pashinyan Wins Reelection in Landslide
Eurasianet
“The elections were a unique event in post-Soviet Armenian history, as the results were not a foregone conclusion. The incumbent won an unexpectedly large mandate to stay in power.”
“Armenian Prime Minister Nikol Pashinyan has won reelection in a landslide, gaining a renewed mandate despite leading the country to a disastrous defeat in last year’s war with Azerbaijan.”
“…But the victory was likely less a strong mandate for Pashinyan than a repudiation of his would-be replacements, dominated by figures from the widely hated former regime. Ahead of the vote Kocharyan emerged as Pashinyan’s strongest challenger, as his air of competence contrasted favorably with the prime minister’s erratic behavior and perceived incompetence dealing with the country’s many post-war challenges. But the former president remained deeply unpopular among Armenians who remembered his corrupt and authoritarian rule from 1998-2008.” Joshua Kucera and Ani Mejlumyan report
Central Asia's Largest Wind Farm Built by Chinese Firm will Power 1 million Kazakh Homes
Xinhua
“Central Asia's largest wind farm built by a Chinese firm is nearly complete in south Kazakhstan despite the COVID-19 pandemic. The landmark project demonstrates how the Belt and Road Initiative is transforming Kazakhstan's power matrix and bringing green energy to the country.”
“Located on a hill-surrounding steppe near the city of Zhanatas in the Zhambyl Region, the wind farm, with a capacity of 100 megawatts, will power 1 million Kazakh homes with clean electricity when all 40 wind turbines are slated to be installed by the end of this month.” Xinhua reports
Electric Planes Pioneer Pivots to Cargo Drones in China
Bloomberg
“The man behind the only electric plane cleared to fly quickly discovered the challenges of converting world-leading technology into profits in a hotly contested, futuristic segment of aviation.”
“Ivo Boscarol, owner of e-plane pioneer Pipistrel, saw a three-year partnership to develop a flying taxi with Uber Technologies Inc. dwindle in 2020, after the ride-hailing giant reined in its aviation ambitions.”
“He’s since pivoted to building drones to carry heavy freight to remote areas of China. Boscarol says this approach is less daunting from a technical, safety and regulatory standpoint than shuttling live passengers across dense cities in electric vertical takeoff-and-landing craft.” Jan Bratanic reports
