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Emerging Markets Daily - March 2
Sea Ltd. "Stock Market Sensation" Continues Rise, Hong Kong Eyes SPACS, India Adds 40 Billionaires in Pandemic Year, EM Bond Volatility, China Digital Currency
The Top 5 Emerging Markets Stories - March 2
“Stock Market Sensation” Sea Ltd. Continues Rapid Growth
“Sea Ltd. expects e-commerce revenue to double in 2021, sustaining its torrid pace of growth as Southeast Asia’s most valuable company counts on regional online shopping demand to persist after the pandemic.”
“Revenue rose to $1.6 billion in the last three months of 2020 from $777.2 million a year earlier, Singapore-based Sea said Tuesday in a statement. Net loss widened to $523.6 million from $283.8 million.”
“Sea, backed by Tencent Holdings Ltd has emerged as a stock-market sensation since its initial public offering in New York in 2017, as investors bet the company can establish itself as a leader in e-commerce and gaming in Southeast Asia. Among companies valued at $100 billion or more, the stock is the No. 1 performer in Asia since the start of last year and only trails Tesla Inc. globally.”
“It’s also trying to establish fintech as a third growth driver. Sea said Tuesday it’s acquired 100% of Composite Capital Management, a Hong Kong-licensed global investment management firm. With the acquisition, the company is establishing Sea Capital, a platform to manage its overall investments.” Bloomberg reports.
Hong Kong Looks to Join SPACS Frenzy
“Hong Kong’s financial regulators may open the door for so-called blank-cheque companies to raise funds on the city’s stock market, as local tycoons are being driven offshore to tap a deal making frenzy.”
“The city’s securities regulator and stock-market operator were studying proposals allowing special purpose acquisition companies (SPACs) to raise capital on the Hong Kong stock exchange, according to a briefing on Monday to the Financial Leaders Forum, which was chaired by Financial Secretary Paul Chan Mo-po.”
“The Securities and Futures Commission (SFC) and Hong Kong Exchanges and Clearing (HKEX) have been instructed to explore suitable listing regimes to enhance the competitiveness of Hong Kong as an international financial centre while safeguarding the interests of the investing public, according to a government statement.” South China Morning Post reports.
India Adds 40 New Billionaires in Pandemic Year
“Forty Indians entered the billionaires' club in the pandemic-stricken 2020 to take the number of those in the coveted list to 177 people, a report said on Tuesday.”
"Mukesh Ambani continued to be the wealthiest Indian with a net worth of USD 83 billion. The head of Reliance Industries witnessed a 24 per cent jump in fortunes and climbed up one spot to be the eighth richest globally, as per the Hurun Global Rich List.”
”Gautam Adani from Gujarat, who has had a spectacular rise in fortunes in the last few years, saw his wealth almost doubling to USD 32 billion in 2020 and climbed 20 places to be the 48th richest person globally and the second wealthiest Indian. His brother Vinod's wealth grew 128 per cent to USD 9.8 billion.”
“The report comes at a time when concerns are being raised about a 'K-shaped' recovery being underway, where a select few prosper. Hurun India's Managing Director and Chief Researcher Anas Rahman Junaid said Indian wealth creation is dominated by cyclical or traditional industries compared to tech-driven wealth creation in the US and China.” Economic Times reports.
No End in Sight for EM Bond Volatility, BlackRock Says
“There’s no immediate end in sight for bond investors getting tugged between risk-on rallies and selloffs that rekindled nightmares of the 2013 taper tantrum, according to the world’s largest money manager.”
“Sergio Trigo Paz, the London-based head of emerging-market debt at BlackRock Inc., said he’s bracing for a repeat of January and February, when developing-nation assets vacillated from several weeks of a ‘Goldilocks scenario’ to several weeks of turmoil fueled by a spike in U.S. Treasury yields. ‘It’s counter-intuitive, but at the moment of most Goldilocks you have to sell risk and at the moment of greatest taper you need to buy, he said.”
“BlackRock is among a cadre of investors and strategists from Ashmore Group Plc to Morgan Stanley who say that emerging-market bonds won’t suffer the same fate as in 2013, even after enduring their worst week since September.”
“There are several notable differences, said Trigo Paz. For one, the asset class isn’t the crowded trade it was back then. Secondly, the economic fundamentals in the so-called Fragile Five, which suffered the most eight years ago, have generally improved. Meantime, fiscal stimulus will drive demand for commodities, oil prices may climb and the U.S. dollar could weaken, he said.”
“With that backdrop, Trigo Paz said he’s betting on high-yield bonds from oil exporters like Angola, Gabon and Russia against their counterparts in Argentina and Ecuador, which both underwent debt restructurings last year. He also favors South Africa over Brazil, Mexico over Colombia and Poland over its regional peers. Another strategy is to buy developing-nation currencies, funded with the U.S. dollar, Japanese yen, euro or Swiss franc.” Bloomberg reports.
China Charges Ahead With a National Digital Currency
“The electronic Chinese yuan is now being tested in cities such as Shenzhen, Shanghai and Beijing. No other major power is as far along with a homegrown digital currency.”
“China has charged ahead with a bold effort to remake the way that government-backed money works, rolling out its own digital currency with different qualities than cash or digital deposits. The country’s central bank, which began testing eCNY last year in four cities, recently expanded those trials to bigger cities such as Beijing and Shanghai, according to government presentations.” The New York Times reports