Discover more from Emerging World
Emerging Markets Daily - March 25
China Tech Shares Plunge, Suez Canal Clearing Could Take "Weeks," Russia FM Blasts EU As Moscow Embraces Beijing, India Eyes Africa For More Oil Imports, UAE To Invest $10B in Indonesia Infrastructure
The Top 5 Emerging Markets Stories - March 25
China Tech Giants Plunge On US Delisting, Crackdown Fears
“Tech giants from Tencent Holdings Ltd to Alibaba Group Holding Ltd. dived after U.S. regulators revived threats to toss China’s largest corporations off U.S. bourses, compounding concerns of a widening domestic antitrust crackdown.”
“Alibaba slid almost 4% in Hong Kong Thursday, joining a U.S. selloff that wiped at least 20% off Chinese tech names including Tencent Music Entertainment and iQiyi Inc., Baidu Inc.’s Netflix-like streaming subsidiary. The Hang Seng Technology Index slid to its lowest since November before ending down just 1.2%.”
“Tencent, which on Wednesday sought to allay investor concerns about the fallout to its fintech division from growing regulatory pressure, slid 2.8% and has now shed more than $200 billion of market value since a January peak. Following Tencent’s fourth-quarter results, brokerages including Goldman Sachs, Macquarie and HSBC cut their price targets on Asia’s largest company for the first time in at least a year.”
Meanwhile, Bloomberg reports that “China’s stock market is showing the world what happens when central banks and governments start exiting pandemic-era stimulus -- and it’s not pretty.”
“The CSI 300 Index has lost 15% since climbing to a 13-year high last month as concern about tighter monetary policy replaced optimism about the economic recovery. Like elsewhere, the rally had been led by investors chasing a small number of stocks, many of whom piled in at the top as a frenzy grew. Now the gauge is trailing MSCI Inc.’s global benchmark by the most since 2016 this month and the most popular mutual funds are getting crushed.”
“Central banks around the world are dealing with the aftermath of last year’s multiple interest-rate cuts and trillions of dollars in stimulus. Some, like the Federal Reserve and the European Central Bank, have said they’ll stick to their loose policies for now. Others are being forced to act by inflation risks. Brazil last week became the first Group of 20 nation to lift borrowing costs, with Turkey and Russia following suit. Norway is also turning more hawkish…”
“‘China’s stock-market rout may reveal the challenge for stimulus withdrawal globally given that China is ‘first in, first out’ in the pandemic,’ said Peiqian Liu, a China economist at Natwest Markets in Singapore.” Bloomberg reports.
Suez Canal Blockage Could Take “Weeks” To Clear, Disrupting Trade
“Rescuers have warned that the Suez Canal could remain blocked by a grounded giant container ship for ‘weeks,’ raising fears of significant disruption to global trade.”
“As dredgers arrived on Thursday to help dig out the 220,000-tonne Ever Given after it became wedged across the canal during a sandstorm on Tuesday, Boskalis, a salvage company involved in the rescue, likened the operation to trying to free a beached whale.”
“‘The more secure the ship is, the longer an operation will take,’ Boskalis chief executive Peter Berdowski told the Netherlands’ Nieuwsuur television programme. ‘It can take days to weeks. Bringing in all the equipment we need, that’s not around the corner.’”
“The Ever Given is one of the world’s largest container ships, owned by Taiwan-based Evergreen, and is weighed down by hundreds of thousands of tonnes of cargo, with its position suggesting its bow and stern are wedged on the shallower banks of the canal edge at the southern end.”
“About 100 ships are stuck either side of the canal waiting to pass through…In normal times the Suez Canal handles more than 10 per cent of global seaborne trade and a similar amount of petroleum shipments, as the fastest sea route between Europe and Asia. Oil prices have been supported by the blockage as long lines of tankers at either end of the canal have lined up waiting for the container ship to be cleared. Brent crude, the international benchmark, has risen by almost 5 per cent to about $63 a barrel since the canal closed.” The Financial Times reports.
Geopolitics: Embracing Beijing, Russian FM Blasts European Union
“Russian Foreign Minister Sergei Lavrov said that Russia has ‘no relations with the European Union,’ as Beijing made a public display of closing ranks with Moscow in opposition to the US sanctions policy on March 23.”
“Lavrov accused the EU leaders of ‘destroying’ relations with Moscow, as relations between Russia and the EU sink to their lowest level in decades. ‘There are no relations with the European Union as an organisation. The entire infrastructure of these relations has been destroyed by the unilateral decisions of Brussels,’ Lavrov said during a joint press conference with his Chinese counterpart Wang Yi, as cited by Tass.”
“Russia and the West have clashed repeatedly over the sanctions policy, but Moscow significantly hardened its line in February when Lavrov laid out new rules of the game during a joint press conference with the European Union's Josep Borrell, deliberately humiliating the bloc's top foreign policy diplomat, who was on a trip to Russia, by expelling three diplomats while he was at the lectern.”
“Lavrov said that Russia would no longer tolerate sanctions that damage Russia’s economy and promised tit-for-tat actions should more sanctions be applied, which included breaking off diplomatic relations with Europe…”
“While the row so far has been largely between Moscow, Brussels and Washington, China entered the fray on March 23 but holding a joint press conference of Lavrov and Wang to clearly show solidarity between the two powers in their opposition to the US-lead sanctions policy. The EU has recently imposed sanctions on China over its treatment of the Uighur minority and the policy of holding large numbers in concentration camp-like centres in the interior of the country.” bne IntelliNews reports.
India Looks to Africa To Reduce Oil Dependence On The Middle East
“African nations could play a central role in efforts by India to diversify its sources of oil and gas, India's oil minister said on Wednesday, as the nation strives to reduce its energy reliance on the Middle East.”
“India, the world's third biggest oil importer, has asked state refiners to speed up the diversification of oil imports to gradually cut their dependence on the Middle East after OPEC+ decided earlier this month to largely continue production cuts in April.”
“‘As India seeks to further diversify sourcing of crude oil and LNG, Africa has a central role - largely due to its proximity and absence of any choke points in trans-shipments,’ Dharmendra Pradhan told an industry summit. Africa's share of India's oil imports is about 15%, or about 34 million tonnes of oil last year, Pradhan said. India's imports of gas from Africa are also gradually increasing.”
“India traditionally buys oil from Nigeria, Angola, Algeria, Egypt and Equatorial Guinea. In recent years it has bought oil from Cameroon, Chad, Ghana and Côte d'Ivoire also, Pradhan said. India imports over 80% of its oil and has a huge oil import bill.” Economic Times of India reports.
UAE To Invest $10B in Indonesia Fund For Infrastructure Projects
“The United Arab Emirates will invest $10 billion in Indonesia's new sovereign wealth fund to be spent on projects inside Southeast Asia's biggest economy, the UAE state news agency reported on Tuesday.”
“This marks the biggest foreign investment commitment for the Indonesia Investment Authority (INA) and the first since its February launch. Authorities have previously said the INA had also received commitments of up to $10 billion prior to its launch, from global companies and agencies, such as the US International Development Finance Corporation and Japan Bank for International Cooperation, and some foreign pension funds.”
“Jakarta will seed the fund with $5 billion in cash and other assets. Unlike many other sovereign wealth funds, which manage excess oil revenues or foreign exchange reserves, the INA seeks foreign funds as co-investors to finance the country's economic development and aid pandemic recovery.”
“The UAE investment will be used for infrastructure projects, including roads and ports, and also tourism, agriculture and other ‘strategic sectors,’ the state news agency WAM reported,” Asharq Al-Awsat reports.
Note from Afshin: Clubhouse Alert!
The Clubhouse App has emerged as an important hub for dynamic and surprising conversations about business, politics, the arts and more from across the emerging world.
My friend Christopher Schroeder is a remarkable entrepreneur, investor, thinker and convener of great minds, and author of the excellent Startup Rising: The Entrepreneurial Revolution Remaking the Middle East.
If you are on Clubhouse, please note that Chris will be hosting a series of Clubhouse conversations over the next few days. Schedule and details below for Clubhouse members, from an email Chris sent.
From Chris Schroeder:
Thursday March 25th at 8:00 pm East Coast, I will join the remarkable travel entrepreneur and founder Mei Zhang of Wild China with the legendary Chinese venture capitalist, Kaifu Lee. We will discuss his best selling book AI Superpowers and all that has changed in the two years since its publication - in China, the US, innovation and the world.
Friday, March 26 at noon East Coast, I'll join the great leader in emerging market tech advice and support, Mark Heynen founder of Next Billion Advisors and a host of global rising stars discussing how the best learn from failure and scale to success across rising markets.
Tuesday, March 30th at 9:00 PM East Coast, I'm hosting the great builder of Brazil property tech Viva Real, Brian Requarth. We will be joined by other leading entrepreneurs from Latin America and discuss his new must-read best seller: Viva The Entrepreneur in Latin America