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Emerging Markets Daily - March 23
Turkey Stocks Plunge, Saudi Says China Energy Security "Highest Priority," Bolsonaro Blasted by Business Elites, Sea vs the Rest in SE Asia E-Commerce, Nigeria Start-Ups Rising
The Top 5 Emerging Markets Stories - March 23
Turkish Stocks Head for Worst Two Day Drop in 20 Years
“Turkish stocks headed for their worst two-day plunge in 20 years as market gyrations continued in the wake of the central bank chief’s surprise dismissal over the weekend.”
“Stocks took the brunt of the selling on Tuesday and the Istanbul bourse was once again forced to halt trading as circuit breakers were flipped, first by a loss of 5%, then 7%. Later in the morning, equities pared some losses and the lira stabilized near a record low.”
“Amid all the selling, Turkish equities and the lira have gone from being among the best bets in emerging markets to the worst performers after President Recep Tayyip Erdogan’s decision to fire his hawkish central bank Governor Naci Agbal after just three months on the job. That’s spurred concerns Agbal’s orthodox policies will be rolled back, sending the lira to its worst drop since the nation’s currency crisis of 2018.”
“Last year, Turkish stocks were among the top three primary equity indexes tracked by Bloomberg, when measured in local currency. After the slump this week, they’re at the bottom in the same group.”
“It was a similar picture for the lira after Agbal’s appointment in November. At the start of March, the currency was the strongest in emerging markets. Now Renaissance Capital predict it could slide a further 14% by year-end.” Bloomberg reports.
Saudi Aramco Says China Energy Security “Highest Priority”
“Saudi Aramco will ensure China’s energy security remains its highest priority for the next 50 years and beyond as new and existing energy sources run in parallel for some time, CEO Amin Nasser told the China Development Forum on Sunday.”
“Saudi Arabia, the world’s biggest oil exporter, retained its position as China’s top supplier in the first two months this year, with volumes up 2.1% to 1.86 million barrels per day (bpd), China customs data showed on Saturday.”
“The Kingdom beat Russia to keep its ranking as China’s top crude supplier in 2020 despite unprecedented production cuts in a pact between the Organization of the Petroleum Exporting Countries and its allies to balance global markets after demand plunged during the COVID-19 pandemic.”
“‘Ensuring the continuing security of China’s energy needs remains our highest priority – not just for the next five years but for the next 50 and beyond,’ Nasser said in a video speech.”
“‘We appreciate that sustainable energy solutions are crucial to a faster and smoother global energy transition ... But, realistically, this will take some time since there are few alternatives to oil in many areas.’ Nasser told an earnings call earlier on Sunday that Chinese demand was very close to pre-pandemic levels while Asia, East Asia in particular, had seen a strong pickup.” Asharq Al-Awsat reports.
Geopolitics: Bolsonaro Blasted By Business Establishment on Covid
“Hundreds of Brazilian business leaders and economists blasted President Jair Bolsonaro's handling of the coronavirus crisis on Monday and called for a new policy approach as the country enters a critical phase of its COVID-19 outbreak.”
“The letter, published in newspapers and signed by former central bank chiefs and some of Brazil's richest bankers, underscored a growing revolt by business leaders against the far-right president whom many had backed for his 2018 election.”
“Without naming Bolsonaro, they upbraided ‘the country's highest political leadership’ for ignoring science, encouraging crowds, hyping unproven treatments and ‘flirting with the anti-vaccine movement…’ A surge of infections has made Brazil the latest epicenter of the coronavirus pandemic, killing more than 15,000 people last week and pushing hospitals across the country to the limit.”
“Brazil's government is racing to obtain fresh supplies of drugs needed to safely intubate patients, Jarbas Barbosa, assistant director of the Pan American Health Organization, said on Monday, after concerns of shortages arose this month.”
"‘We are on the verge of an explosive phase of the pandemic, and it is fundamental that, from now on, public policy be based on data, solid information and scientific evidence,’ wrote the business leaders and economists. ‘The country is tired of out-of-place ideas, inconsequential words and late or mistaken actions,’ they said. ‘Brazil demands respect.’” Channel News Asia reports.
Southeast Asia E-Commerce Rivalry: Sea Continues Its Rise
“In front of an open-air Jakarta restaurant, delivery drivers clad in the orange colours of Southeast Asia tech group Sea Ltd wait for orders next to the green-jacketed riders of market leaders Gojek and Grab, in what has become the latest battleground for tech supremacy in Southeast Asia.”
“The humble noodles eatery signed up for Sea’s nascent ShopeeFood service a month ago, but ‘immediately, there were orders everyday,’ said manager M.A Rasyid.”
“Riding on the success of a cash-generating gaming business, U.S.-listed Sea has invested heavily in its Shopee e-commerce brand and successfully taken on Alibaba’s Lazada and other rivals in recent years. Its share price has risen five-fold over the past year, giving Singapore-based Sea a market value of $111 billion.”
“Now it is muscling into food delivery and financial services in Indonesia, the world’s fourth-most-populous country, posing a new threat to regional rivals including ride-hailing and delivery unicorns Grab and GoJek.”
“At stake is a slice of the more than 400 million internet users in Southeast Asia’s digital economy, which is estimated to triple to $309 billion by 2025, according to a study by Google, Temasek and Bain & Company.” Reuters reports.
Nigerian Start-ups Raise More in a Month Than All of 2020
“In a month tech investors decided to open their investment wallets in an unusual manner, five Nigerian startups have found themselves $202 million richer. It is the most investment in a single month since 2019 and beats the whole money raised in 2020.”
“Flutterwave opened the month of March with a $170 million Series C funding that pushed its valuation to over $1 billion; Havenhill Nigeria Limited, a clean energy company raised $4.5 million on the same day as Flutterwave; Kuda Bank followed with $25 million; Termii and Kwik came a day later announcing raising $1.4 million $1.7 million each.”
“It is the most funding closed in a month since the $200 million investment by Visa in Interswitch. Although Paystack pulled in $200 in the deal with Stripe in October 2020, it is an outright acquisition and so does not count as funding.”
“The $202 million funding is even more impressive as it eclipses the record of the entire investment in 2020 when about 82 Nigerian startups could only haul in $170 million. According to a report compiled by StartupLists, venture capital investments in Africa took off on a high note in the first three months of 2020 only to be blindsided by the outbreak of the COVID-19 pandemic and consequent lockdowns and economic meltdown across the world.” Nigeria’s Business Day reports.