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Emerging Markets Daily - March 24
Stuck Ship Blocks Suez Canal, Tencent Under Fire from Regulators, Coal India Ltd Eyes Solar Energy, Abu Dhabi Firms Invest $150M in Telegram, Euro Firms Say S. Korea Biz Environment Dips
The Top 5 Emerging Markets Stories - March 24
Suez Canal Blocked, Stuck Container Ship Severs Vital Trade Artery
“The Suez Canal has been blocked after one of the world’s largest container ships ran aground, severing a vital trade artery and threatening to disrupt global shipments for days.”
“The Evergreen container ship, which is almost as long as the Empire State Building is tall, is wedged across the southern end of the canal, with tug boats engaged in a frantic effort to free it. Taiwan-based Evergreen Marine, which operates the vessel, said on Wednesday that the ship had entered the Suez Canal from the Red Sea at 8am eastern European time on Tuesday…”
“Every day, about 50 vessels sail through the 120-mile length of the Suez Canal, which was built between 1859 and 1869 to connect the Mediterranean to the Red Sea and Asia. Samir Madani at TankerTrackers said that within hours of the blockage, about 10m barrels of crude and petroleum product shipments had backed up near the north and south entrances to the canals...”
“Total oil flows through the canal and its associated Sumed pipeline system accounted for almost 10 per cent of global seaborne traded petroleum in 2018, according to the US Energy Information Administration. About 8 per cent of liquefied natural gas trade also passed through the canal that year, the EIA said.” The Financial Times reports.
Tencent Under Fire from Regulators, Stock Down $170B from Peak
“Beijing’s clampdown on its most powerful internet firms is clouding the prospects for Tencent Holdings Ltd. and its $120 billion financial services operation just as it’s casting around for new sources of growth.”
“China’s top watchdogs have stepped up oversight of the country’s most valuable company, scrutinizing everything from Tencent’s insights into the online behavior of a billion-plus people to an investment portfolio that spans hundreds of startups. Regulators are saidto be considering forcing Tencent to overhaul a promising fintech division, folding the operation into a holding company in much the same way they’re demanding of Jack Ma’s Ant Group Co.”
“The uncertain outcome of that wide-ranging effort will overshadow Tencent’s giant gaming arm when it reports quarterly earnings Wednesday. Billionaire founder Pony Ma and his lieutenants face questions on Beijing’s intentions and how it could go about revamping China’s largest online banking and lending operation after Ant’s. The threat of a probe has already wiped $170 billion off the company’s value since a January peak. It shares stood largely unchanged Wednesday.” Bloomberg reports.
Coal India Ltd, World’s Largest Coal Miner, Eyes Solar Energy
“Coal India Ltd, the world's largest coal miner, could venture into solar wafer manufacturing and wants to ‘aggressively’ participate in the country's solar energy auctions, its chairman told Reuters on Tuesday.”
“Pramod Agarwal said its joint venture with state-run NLC India Ltd plans to invest around 125 billion rupees ($1.73 billion) in solar power projects with a capacity of 3,000 megawatts, of which Coal India will invest some 60 billion rupees by March 2024.”
“At the same time, it plans to keep closing small mines and stay away from opening those that would entail mass hiring, Agarwal said. The group closed 82 mines in the three years to March 2020, resulting in cuts to its workforce of 18,600 employees.”
"‘Coal as you know, we're going to lose business in the next two, three decades. Solar will take over (from) coal slowly as a major energy provider in the coming years," Agarwal said in an interview.”
“India, which makes solar cells and modules but not wafers, is planning to levy customs duties on some solar equipment from April 2022 as it looks to expand local manufacturing capacity.” The Daily Star of Bangladesh/Reuters reports.
Mubadala, Catalyst Partners Invest $150 Million in UAE-based Telegram
“Abu Dhabi's Mubadala Investment Company has invested $75 million in 5-year pre-IPO convertible bonds of Telegram, the social media platform, with Abu Dhabi Catalyst Partners investing a further $75 million…”
“Launched in 2013 by brothers Pavel and Nikolai Durov as a secure messaging app, Telegram has its headquarters in the UAE. It has become one of the 10 most downloaded apps in the world with over 500 million monthly active users.”
“In the last year and more, Mubadala has made a point of committing significant funding into emerging technology and digital focussed businesses, cutting across geographies…”
“‘We believe that Telegram is well-positioned for an inflection point that will transform it into a leading global technology company,’ said Faris Sohail Faris Al Mazrui, Head of Mubadala’s Russia and CIS Investment Program.” Gulf News reports.
Meanwhile, The National reports that “Telegram’s user numbers have increased in recent months after Facebook-owned WhatsApp made changes to its terms and conditions, sparking privacy concerns…Telegram will also open an office in Abu Dhabi Global Market, the UAE capital’s financial free zone.”
European Companies Say S. Korea Business Environment Deteriorating
“Over 60 percent of European companies believe doing business in Korea has become more difficult over the last two years due to bureaucratic red tape, a survey by the European Chamber of Commerce in Korea showed Monday.”
"A total of 127 executives of European companies, representing 47,000 employees at firms ranging from services to manufacturing, took part in the survey conducted in January. The firms have a total turnover of 65 trillion won ($57.5 billion).”
"Of the total respondents, 63 percent said the business environment here has been deteriorating, with a majority citing the legislative environment and regulations (62 percent) as well as the ‘discretionary enforcement of regulations’ (58 percent) as the major challenges.
“Almost half of the businesses also stated that reforms implemented by the government in 2020 did not help their operations. Businesses found the burdens posed by the government's labor policies as challenges in setting up business plans for 2021.”
“Korea's militant unions, rigid labor market and high corporate tax have consistently been cited as difficulties in conducting business in Korea. Foreign companies have also expressed frustration with the minimum wage hike and limits placed on hiring non-regular workers under the Moon Jae-in administration.” The Korea Times reports.