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Emerging Markets Daily - March 26
Suez Canal Blockage Spreads Trade Turmoil, DBS Bullish on Hong Kong, India Limits Vaccine Exports as Covid Cases Rise, Mubadala Buys Assets from Petrobras, Morocco Growth Revised Upward
A Global Shipping Traffic Jam - Photo Credit: Christian Henderson via Twitter
The Top 5 Emerging Markets Stories - March 26
Suez Canal Blockage Continues to Wreak Havoc on Global Shipping
“Ships are beginning costly and time-consuming detours around Africa with the Suez Canal still blocked by a massive container vessel, as concerns mount that a complex rescue mission could take weeks.”
“The prospect of a longer-than-anticipated outage along what’s arguably the world’s most important maritime trade route threatens further turmoil in a shipping sector that’s already scrambling to keep sea transportation for everything from finished goods to energy and commodities on track.”
“Work since Tuesday to re-float the stricken Ever Given has so far been unsuccessful, with tugs and diggers failing to budge the giant, 400-meter long vessel and clear the route for stranded oceangoing carriers hauling billions of dollars worth of oil and consumer goods.” Bloomberg reports.
Meanwhile Hellenic Shipping News and Reuters reports that “A container ship blocking the Suez Canal like a ‘beached whale’ may take weeks to free, the salvage company said, as officials stopped all ships entering the channel on Thursday in a new setback for global trade…”
“‘We can’t exclude it might take weeks, depending on the situation,’ Peter Berdowski, CEO of Dutch company Boskalis which is trying to free the ship, told the Dutch television program Nieuwsuur.”
“A total of 206 large container ships, tankers carrying oil and gas, and bulk vessels hauling grain have backed up at either end of the canal, according to tracking data, creating one of the worst shipping jams seen for years.”
“The blockage comes on top of the disruption to world trade already caused in the past year by COVID-19, with trade volumes hit by high rates of ship cancellations, shortages of containers and slower handling speeds at ports.”
DBS Bullish on Hong Kong, Sees Record High Market In Next 12 Months
“DBS is bullish on Hong Kong stocks. The Singapore-based lender believes the market could reach a record high over the next 12 months despite the recent reversal.”
“Hong Kong stocks are in correction mode, having fallen for five straight days The benchmark has eased more than 10 per cent from its recent high on February 17. However, DBS forecasts the Hang Seng Index could reach the 33,400 level over the coming 12 months. The benchmark peaked at 33,154.12 on January 26 in 2018.”
“‘As the economy recovers and unemployment improves, both growth and value stocks will see good performance in terms of fundamentals,’ Dennis Lam, Hong Kong and China equities strategist at DBS, said at a media briefing on Thursday.”
“Their bullish view takes into consideration prospects of a post-Covid-19 economic recovery as well as continued southbound inflows into the Hong Kong stock market, said Lam.” South China Morning Post reports.
As India Covid Numbers Rise, Authorities Hold Back Vaccine Exports
“With its own battle against the coronavirus taking a sharp turn for the worse, India has severely curtailed exports of Covid-19 vaccines, triggering setbacks for vaccination drives in many other countries.”
“The government of India is now holding back nearly all of the 2.4 million doses that the Serum Institute of India, the private company that is one of the world’s largest producers of the AstraZeneca vaccine, makes each day.”
“India is desperate for all the doses it can get. Infections are soaring, topping 50,000 per day, more than double the number less than two weeks ago. And the Indian vaccine drive has been sluggish, with less than 4 percent of India’s nearly 1.4 billion people getting a jab, far behind the rates of the United States, Britain and most European countries.:
“Just a few weeks ago, India was a major exporter of the AstraZeneca vaccine, and it was using that to exert influence in South Asia and around the world. More than 70 countries, from Djibouti to Britain, received vaccines made in India, with a total of more than 60 million doses. From mid January into March, not more than a few days passed between major vaccine shipments leaving India.” The New York Times reports.
Mubadala Buys Assets From Petrobras of Brazil For $1.65 Billion
“Abu Dhabi's Mubadala Group bought a refinery and logistics assets from Brazil's state oil company Petrobras for $1.65 billion, as the company looks to expand its oil and gas assets abroad. The transaction included the sale of the Landulpho Alves Refinery as well its associated logistics assets in the state of Bahia.”
“The refinery, one of Brazil's oldest, is also its third largest. It includes an integrated petrochemical complex, which is one of the largest in the southern hemisphere. It is capable of refining liquefied petroleum gas, gasoline, diesel fuel and lubricants. It has a capacity of 333,000 barrels per day.”
“Mubadala has exposure to the associated chemicals assets through its investment in Spanish group Cepsa, in which it is the majority shareholder with a 63 per cent stake.”
“Cepsa owns 72 per cent of Camaçari in Bahia state, with the remainder held by Petrobras. The facility is the world's largest linear alkylbenzene (LAB) manufacturing plants.” The National reports.
Morocco Central Bank Revises Growth Upward to 5.3%
“Morocco’s central bank revised upwards Morocco’s economic growth to 5.3% in 2021 citing the beginning of the end of the health crisis with the roll out of the vaccination campaign and a better crop year.”
“The bank said growth will pick up from a contraction of 7% last year under the combined effect of drought and the pandemic. The crop year will improve thanks to the recent rainfall which is expected to boost cereals output to 95 million quintals, the bank said.”
“After its quarterly meeting, the bank held unchanged its key interest rate at 1.5% saying that borrowing costs were favorable to the economic outlook. The bank had cut the rate from 2% in September in a bid to shore up the economy amid the coronavirus crisis which hit both domestic and foreign demand.”
“The current account deficit eased 1.8% the bank said, adding that although tourism activity was at a halt, remittances from Moroccans abroad showed resilience and imports dropped.” The North Africa Post reports.