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Emerging Markets Daily - March 14
The Next High-Flying EM Start-Ups, Africa Economies To Bounce Back, US Seeks India Help to Counter China, US Xiaomi Ban Halted, Israel Parties Like It's 2019, "The Last Chinamen of Mumbai" Video
The Top 5 Emerging Markets Stories From Global Media - March 14 + A Weekend Video
The Next Emerging Market Tech Start-Ups Ready to Fly
“Most investors had never heard of Coupang until March 11, when the South Korean e-commerce purveyor raised $3.5 billion in an initial public offering. The company closed its first day of trading with a market value close to $90 billion.”
“It’s not the only emerging-markets platform to burst onto the radar lately. Allegro (ticker: ALE.Poland) became Poland’ s most valuable company after its IPO last October. Russia’s Ozon Holdings (OZON) has soared 80% since going public in November. That’s peanuts compared with regional champions like MercadoLibre (MELI) in Latin America or Sea (SE) in Southeast Asia, whose shares have tripled and quintupled, respectively, over the past year.”
“There’s a pattern here: Homegrown startups in the world’s hottest industry are beating the pants off global giant Amazon.com and Chinese heavyweight Alibaba Group Holding (BABA)…”
“A similar donnybrook is taking shape in Southeast Asia, where Indonesia and the Philippines alone offer nearly 400 million consumers, says Kevin Carter, chief investment officer at the EMQQ Emerging Markets Internet & E-Commerce exchange-traded fund (EMQQ)…”
“The highest-stakes battle for the superapp is taking shape in India, with its youthful population of 1.4 billion. Amazon is a top player here, locked in a dogfight with Flipkart, a local creation now majority-owned by Walmart (WMT). But the duopoly is challenged by Jio Platforms, the digital subsidiary of family conglomerate Reliance Industries (500325.India), and a range of startups like food-deliverers Zomato and Swiggy, or the self-explanatory Paytm.”
“If Coupang’s successful debut is any guide, a steady stream of these names should be heading for markets soon. ‘India could have 10 IPOs this year,’ Carter says.” Barron’s reports.
Africa’s Economies To Bounce Back This Year, Though Debt Looms
“Africa’s economies are expected to bounce back this year, according to the African Development Bank’s (AfDB) African Economic Outlook 2021, but governments will continue to face substantial debt risks as the costs of Covid-19 mount.”
“Real GDP on the continent is projected to grow by 3.4% in 2021 after shrinking by 2.1% last year, a recovery driven by the effective deployment of therapeutics and vaccines, continued implementation of the Africa Continental Free Trade Agreement, and the introduction of digitalisation and work-from-home arrangements. More than half of the countries on the continent have now received vaccines, with deliveries under the Covax programme starting in February.”
“However, the recovery could still be jeopardised by a resurgence of Covid–19, limited capital flows, low commodity prices, low tourism and remittances, extreme weather events, and social tensions, says the Bank, which again highlighted Africa’s precarious debt situation…”
“AfDB President Akinwumi Adesina said that it is imperative that the international community works closely with Africa on new debt relief mechanisms.” African Business reports.
Geopolitics: Biden Admin Seeks India Support to Contain China
“The Biden administration is working to embed India in a network of countries in sharp competition with China, though they need to smooth over disagreements that include human rights and New Delhi’s acquisition of a Russian defense system.”
“Highlighting the push was Friday’s virtual meeting between President Biden and the prime ministers of two longtime treaty allies—Australia and Japan—as well as of India, the fourth country in the so-called Quad and the least developed economically.”
“The leaders committed to a full-throttle effort to expand production in India of Covid-19 vaccines designed by U.S. company Johnson & Johnson, with some of the doses going to Southeast Asian and other developing nations, in an effort, an Indian official said, to compete with China’s ‘vaccine diplomacy” with other developing countries.”
“While the Quad has been around on and off for more than a decade, Washington in recent years has turned to the group as the U.S. rivalry with China intensified. India’s has too. A clash last year between Indian and Chinese troops along their contested Himalayan border was the deadliest in more than five decades and provided an additional opening for Washington.” The Wall Street Journal reports.
Meanwhile, the Hindustan Times reports that “A day after they created history by holding the first-ever summit of the Quadrilateral Security Dialogue — also called the Quad — leaders of the four member countries wrote a joint Op-Ed Saturday offering their partnership as a ‘spark of hope to light the path ahead’ in the darkness brought on by the Covid-19 pandemic.”
India is not alone in being pushed by Washington to choose sides. As the Korea Times reports: “South Korea and the United States will hold a two-plus-two meeting of their foreign and defense ministers next week, the first of its kind in over four years, a sign of the Joe Biden administration's commitment to restoring their bilateral alliance after four years of neglect under former President Donald Trump.”
”Although the meeting will showcase the special relationship of the allies, the long-delayed, long-awaited dialogue is not expected to proceed in South Korea's favor, as Seoul is expected to face a tough call from Washington that will ask, if not force, the country to support American policy vis-a-vis China amid the intensifying U.S.-China rivalry, according to diplomatic observers.”
Xiaomi Wins US Court Ruling, Investment Ban Halted
“A federal judge has blocked enforcement of the U.S investment ban on Xiaomi Corp. calling the decision to blacklist the Chinese technology giant ‘deeply flawed.’”
“Ordering a temporary halt to the ban in a decision late Friday, Judge Rudolph Contreras cast doubt on the Pentagon’s decision in January to designate Xiaomi as a company with links to the Chinese military…”
“‘Xiaomi is a publicly traded company that produces commercial products for civilian use, is controlled by its independent board and controlling shareholders, and is not effectively controlled or associated with others under the ownership or control of the PRC or its security services,’ the judge said in the opinion, using the abbreviation for the People’s Republic of China.”
“Xiaomi said it was pleased with the judge’s ruling and said it would seek permanent removal of the investment ban. The Pentagon didn’t immediately respond to a request for comment.”
“The decision marks a victory for Xiaomi following its addition, in the waning days of the Trump administration, to the U.S. Defense Department’s list of companies it believed was linked to China’s military. The decision blocked Americans from investing in the company, the world’s third-largest seller of smartphones.”
“While the ruling only grants Xiaomi a reprieve, Judge Contreras said the Defense Department’s decision had caused Xiaomi irreparable harm and said the company was likely to prevail in winning a full reversal of the investment ban. Xiaomi shares have fallen sharply in the wake of its blacklisting, and it was set to be removed from major exchanges and stock market indexes.” The Wall Street Journal reports.
Israel Parties Like It’s 2019 As Mass Vaccinations Open Economy
“At the Beer Bazaar in a historic Tel Aviv flea market, the waitress poured whisky chasers for the already drunk revellers, raised her shot to the sky and cheered Israel’s saviour. ‘To Pfizer!’ she exclaimed, and rushed off to find a table for the crowds pouring through the streets of a neighbourhood in the south of the city on a weekday night...”
“With 4m of its almost 7m adult population fully vaccinated with the BioNTech/Pfizer jab and another 1m awaiting their second dose, Israelis are immersed in a carnival of post-pandemic rebirth that has left its citizens giddy with their new freedoms — restaurants are fully booked, bars are packed, traffic has returned to its infamous snail pace and life, dreary and frightening for a year, is back to normal.”
“From abroad, these look like scenes from a different planet, or from a long-anticipated future — friends hugging and new lovers kissing, silverware and tablecloths inside lavish restaurants, children playing with grandparents and strangers sharing joints on the street. The speed with which Israelis have bounced back holds a tantalising promise for the rest of the world…”
“Israelis spent more days — a total of 139 — under lockdown than any other nation in the world, according to the Oxford Coronavirus Government Response Tracker. In the autumn of 2020, according to data from Johns Hopkins University, the Jewish state had the highest rate of new infections per capita of any country in the world.”
“The lockdowns hit businesses hard. Even though gross domestic product shrunk only 2.4 per cent in 2020, thanks to an unexpected leap in diamond exports, private consumption fell 10 per cent. And while high-tech companies quickly transitioned to working remotely, small businesses did not.” The Financial Times reports.
(From Afshin: As China-India ties continue to deteriorate, check out this wistful short feature from 101India of one of the last remaining residents of the once thriving, but now extinct, Chinatown in Mumbai)
Weekend Video Feature Below: The Last of the Chinamen of Mumbai