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Emerging Markets Daily - March 12
Tencent In China Regulatory Cross-Hairs, Investors Eye India Shipping Privatization, Ant Group CEO Resigns, Quiet Indian Billionaire Adds $16B, Dubai Seeks Global Ban on Hand-Carried Gold
The Top 5 Emerging Markets Stories - March 12
Tencent in China Cross-Hairs as Fintech Crackdown Continues
“Asia’s largest conglomerate was censured by China’s antitrust watchdog on Friday as Beijing expands a crackdown that began with Jack Ma’s online empire.”
“The token fine is just the beginning. China’s top financial regulators see Tencent as the next target for increased supervision after the clamp down on Jack Ma’s Ant Group Co, according to people with knowledge of their thinking. Like Ant, Tencent will probably be required to establish a financial holding company to include its banking, insurance and payments services, said one of the people, seeking anonymity as the discussions are private.”
“The two firms will set a precedent for other fintech players on complying with tougher regulations, the people added.”
“Such a move would mark a significant escalation in China’s campaign to curb the influence of its technology moguls, days after Premier Li Keqiang pledged at the National People’s Congress to expand oversight of financial technology, stamp out monopolies, and prevent the ‘unregulated’ expansion of capital.”
“A progression of rules unveiled in the past six months has taken aim at the dominions built by China’s most successful online entrepreneurs…Tencent has already seen collateral damage from the new regulations, though investors had shrugged this off, pumping up the stock even as Alibaba was punished. Its 26% advance over six months contrasts with a 15% slump for Jack Ma’s e-commerce behemoth, which owns a third of Ant. Shares of Tencent climbed to a record on Jan. 25, valuing it at roughly $950 billion.”
“The stock fell 4.4% in Hong Kong Friday. Shares of Tencent investor Naspers and its unit Prosus also declined. Spreads on Tencent’s 2.39% dollar bond due 2030 widened 9 basis points, while notes issued by fellow Chinese tech giants including Meituan and JD.com Inc. also weakened, according to traders.” Bloomberg reports.
Investors Eye Top Indian Shipping Company as First Privatization Prize
“At least five maritime operators are in talks with the Indian government to buy a majority stake in the country’s biggest shipping company, which could be among the first public entities to be sold in the country’s biggest ever privatization drive.”
“The sale of the state-run Shipping Corp. of India, which controls up to a quarter of the country’s waterborne tonnage, is seen as a test case for bigger privatizations down the road after years of small divestments and growing pressure on India’s government to replenish depleted state coffers after Covid-19 imposed lockdowns.”
“Prime Minister Narendra Modi last month launched a fast-track program to sell state assets that could bring in around $25 billion. Tuhin Kanta Pandey, the secretary at India’s Department of Investment and Public Asset Management, said the government is talking to potential buyers for its 63.7% stake in the shipping company, which operates a fleet valued at more than $1 billion, according to London-based maritime data provider VesselsValue. Official bids are expected over the next three months and the sale could be completed by next year if the offers are deemed satisfactory.”
“Bankers and other people working on the sale said the government is talking to at least five potential bidders. People familiar with the process confirmed three of those: Piscataway, N.J.-based Safesea Group, which runs a fleet of tankers and inland logistics services; Great Eastern Shipping Co. , India’s biggest private vessel operator; and Belgium-based Exmar NV, which operates gas carriers and provides offshore logistics services for the energy industry. These people said two other potential bidders are Vedanta Ltd. , an Indian mining company and oil-and-gas producer, and a consortium led by Dubai-based Foresight Offshore Drilling Ltd. and GMS S.A., a ship recycler also based in Dubai.”
“The operator runs about 60 vessels in a range of sectors, including very large crude carriers, product tankers and gas carriers, container ships, ferries and bulk-commodity carriers. It also owns premium property in Mumbai, including its 19-story headquarters. The company is listed on the local bourse and has a market capitalization of around $800 million. Hellenic Shipping News/Wall Street Journal reports.
Top Ant Group Exec Resigns Amid Turmoil After Failed IPO
“Ant Group Inc. Chief Executive Officer Simon Hu resigned from the company, according to a person with knowledge of the matter, as the company overhauls its business.”
“Hu resigned for personal reasons, said the person, who asked not to be identified because the information isn’t public. Eric Jing, already Ant’s chairman, will become CEO as well effective immediately, the person said. An Ant spokesperson confirmed Hu’s resignation.”
“Hu, who joined Alibaba Group Holding Ltd. in 2005 after working at China’s second-largest lender China Construction Bank, had built a reputation for rolling out innovations such as using data analytics to offer collateral-free financing services to small businesses and helping Alibaba beat Amazon.com Inc. to build Asia’s largest cloud business.”
“He moved from Alibaba to Ant in November 2018 as president, and took over as CEO in December 2019.”
“Ant has been at the center of a regulatory crackdown as China takes aim at the push of technology firms into finance. Its $35 billion initial public offering was abruptly suspended in November. China’s central bank subsequently directed the Hangzhou-based firm to turn itself into a financial holding company, a move that would subject it to capital restrictions, the need for fresh licenses and ownership scrutiny. The overhaul could slash the financial juggernaut’s valuation by about 60% from the $280 billion it was pegged at last year, Bloomberg Intelligence analyst Francis Chan has estimated.” Bloomberg reports.
Quiet Indian Billionaire Adds $16B To His Wealth
“Indian tycoon Gautam Adani has added more billions to his wealth than any one else in the world this year on the back of investor excitement around his ports-to-power plants conglomerate.”
“The net worth of Adani, a first-generation entrepreneur who rarely speaks publicly, has jumped $16.2 billion in 2021 to $50 billion, according to the Bloomberg Billionaires Index. This has made him the year’s biggest wealth gainer, beating even Elon Musk, who has tussled with Jeff Bezos in 2021 for the title of world’s richest. Shares of all Adani group stocks, except one, have rallied at least 50% this year.”
“The surge in wealth dwarfs the $8.1 billion added by Adani’s compatriot and the richest person in Asia, Mukesh Ambani. It also underscores the rising heft of the self-made billionaire, who has lured investment from Total SA to Warburg Pincus. Adani has been rapidly expanding his conglomerate, adding ports, airports, data centers and coal mines in India, while doggedly proceeding with his controversial Carmichael coal project in Australia.”
“Adani Total Gas Ltd, top performer in the group, has jumped almost 97% this year while the flagship Adani Enterprises has advanced 87%. Adani Transmission Ltd is up 77%. Adani Power Ltd and Adani Ports and Special Economic Zone Ltd have gained more than 50% this year. Adani Greene Energy Ltd, after rising over 500% last year, has climbed 10% so far.” Bloomberg reports.
Dubai Seeks Global Ban on Hand-Carried Gold on Flights
“Dubai plans to take the global initiative to put an end to ‘hand-carried’ gold on airline flights, and thus deal a major blow to smuggling of the precious metal. If passengers are still intent on carrying gold – other than the jewellery they wear – then these should be duly declared before they board.”
“Such plans are still in their very formative stage, but according to Ahmed Bin Sulayem, Executive Chairman of DMCC (Dubai Multi Commodities Centre), it’s high time a start gets made.”
“‘We can’t wait for global centres to resolve this matter… we do not need an Elon Musk to come up with a solution,’ said Bin Sulayem on a video conferencing with senior industry and other stakeholders. ‘There needs to be a ban on hand carrying of gold on flights. If the world is serious about controlling the flow of smuggled gold, then they have to start with carried gold.’”
“For years now, commercial flights have become easiest channel for gold, in whatever form it may be in, to be carried from one destination to a market where demand for the yellow metal remains insatiable. Even during the height of the pandemic and with only repatriation flights being allowed into the country, airports and customs authorities across India caught passengers using ingenious ways to smuggle in gold.” Gulf News reports.