Emerging Markets Daily - March 3
Russia Stocks Cut by Major Indexes, Turkey Inflation Soars to 54%, Egypt Feels Pinch of Russia War on Ukraine, Grab Posts $1B 4Q Loss, Commodities Hit Record Highs
The Top 5 Stories Shaping Emerging Markets from Global Media - March 3
Russia ‘Uninvestable’ Stocks Cut by MSCI, FTSE, Russell
Bloomberg
“MSCI Inc. and FTSE Russell are cutting Russian equities from widely-tracked indexes, while the London Stock Exchange suspends dozens of Russian depositary receipts from trading, isolating the stocks from a large segment of the investment-fund industry.”
“An overwhelming majority of market participants see the Russian market as ‘uninvestable’ and its securities will be removed from emerging markets indexes effective March 9, MSCI said. FTSE Russell will delete Russia constituents listed on the Moscow Exchange at a zero value on March 7. Meanwhile, trading in 28 depositary receipts for Russian companies have been suspended on the LSE, Chief Executive Officer David Schwimmer said in an interview with Bloomberg Television on Thursday.”
“According to Bloomberg Intelligence analysts, exchange-traded funds with global allocations will be the most affected MSCI’s and FTSE’s decisions. But the impact should be ‘small,’ since Russia makes up less than 5% of the funds’ global basket, said Rebecca Sin and Eric Balchunas.”
“The Dow Jones Russia GDR Index, which tracks companies like Gazprom PJSC and Sberbank of Russia PJSC, has plunged about 96% in the past two weeks.” Bloomberg reports.
Turkey Inflation Hits 54% - A Two Decade High
Financial Times
“Turkish prices rose at their fastest rate in 20 years in February as the lira tumbled and food and energy prices surged, stirring discontent about the state of the economy.”
“The consumer price index rose 54.4 per cent year on year in February, the Turkish Statistical Institute said on Thursday, outpacing a forecast of 52.5 per cent in a poll by Bloomberg.”
“The data weighed on the lira, down 0.8 per cent on Thursday to about TL14 against the dollar. Food prices climbed 64.5 per cent and transportation jumped 75.8 per cent last month, pushing the index to its highest rate since March 2002.”
“Opinion polls suggest voters are deeply unhappy with the economy, even as Erdogan’s pursuit of growth at all costs lifted gross domestic product by 9 per cent last year. Three out of four Turks last month said the government was mismanaging the economy, according to a survey by MetroPoll.”
“Erdogan on Tuesday promised his government would ‘bring inflation under control in the summer months’. But economists said taming inflation without an interest rate increase was likely to prove elusive, especially as the war in Ukraine spurs higher global energy prices. Turkey imports most of its oil, natural gas and coal, primarily from Russia.” Ayla Jean Yackley reports.
Egypt Sees Dollar Exodus on EM Concerns, While Wheat Import Price Rises
Reuters
“Egypt has seen hundreds of millions of dollars leave its treasury markets since the Russian invasion of Ukraine last week as investors flee emerging markets for safer pastures, two bankers with knowledge of the matter said.”
“Even before the crisis, Egypt had been working to sustain appetite for its treasury bills to plug current account and budget deficits and fend off pressure to let its currency weaken ahead of possible U.S. Federal Reserve rate hikes starting this month.”
“A moderate sell-off of Egyptian treasuries that began on Thursday gained momentum when European markets opened on Monday, according to the bankers, who declined to be name due to the sensitivity of the matter.”
“One said a few hundred million dollars flowed out of the secondary market on Monday and that yields on Egyptian pound denominated treasuries had jumped by 30-40% on average.”
“The other estimated that foreign investors had pulled $3 billion out of Egypt since Thursday, basing the estimate on the higher yields, increased interbank currency market activity and information gleaned from other banks.”
“…compounding Egypt's economic headache, is the threat of the Ukraine crisis driving up the price of imported wheat. Russia and Ukraine accounted for around 80% of Egypt's wheat imports in 2021, data from traders shows. The state grains buyer on Monday cancelled a second international wheat tender in four days as the crisis pushed prices higher.”
“…the Ukraine crisis threatens to deal a new blow to tourist numbers. Russians make up roughly 10% of Egypt's tourists, while Ukrainians account for about 3% although few official statistics are available, said Elhamy El-Zayat, chairman of Emeco Travel.”
SE Asia Superapp, Grab, Posts $1 Billion 4Q Loss
Nikkei Asia
“Singaporean startup Grab marked a net loss of over $1 billion for the fourth quarter of 2021 on heavy investment toward growth, showing that profitability remains a key challenge for the superapp operator as it faces strong competition.”
“In its first quarterly results released since listing on Nasdaq in December, Grab on Thursday reported a net loss of $1.055 billion for the three months through December, widening from a $576 million loss a year earlier. The annual loss reached about $3.4 billion, compared with a $2.6 billion loss in 2020.”
“Grab's core businesses include ride-hailing, food and grocery delivery as well as digital financial services. The company operates in eight Southeast Asian countries -- Singapore, Malaysia, Indonesia, Thailand, the Philippines, Vietnam, Cambodia and Myanmar -- making it one of the most prominent startups in the region along with Singaporean tech peer Sea and Indonesia's GoTo.” Kentaro Iwamoto reports.
Aluminum, Nickel, Coal, Palm Oil Prices Prices Surge on Geopolitical Uncertainty
Hellenic Shipping News
“Aluminium prices climbed to an all-time high on Thursday, while nickel surged to its highest in 11 years as Russia’s invasion of Ukraine prompted further sanctions on Moscow, raising trader concerns over supplies from the Black Sea region.”
“Commodity markets extended their bull runs on Thursday, with aluminium, coal and palm oil all hitting new records while crude oil and wheat scaled multi-year highs as Russia’s invasion of Ukraine disrupted global raw material flows.”
“Three-month aluminium on the London Metal Exchange CMAL3 rose more than 3% to a record high of $3,691.50 a tonne. In Shanghai, the most-traded contract SAFcv1 advanced 3.7% to 23,775 yuan ($3,763.65) a tonne.”
“LME nickel CMNI3 climbed 6.1% to $27,470 a tonne, after hitting its highest since April 2011 at 27,815 a tonne.”
“‘Aluminium and nickel once again led the base metals sector higher as the market braces for disruptions to Russian supply,’ said ANZ in a note. ‘Maersk, which handles shipments for Russian aluminium giant United Co Rusal has suspended operations in Russia.’”
“Sanctions by Western nations have prompted the world’s three biggest container lines to suspend cargo shipments to and from Russia at a time when aluminium inventories are low.”
“The United States is preparing a sanctions package targeting more Russian oligarchs as well as their companies and assets, two sources familiar with the matter said on Wednesday, as Washington steps up pressure on Russian President Vladimir Putin.” Hellenic Shipping News reports.
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