Emerging Markets Daily - May 20

Bitcoin Gyrates on China Crackdown, New Asia Covid Outbreaks, Africa and Islamic Banking, ByteDance Co-Founder Steps Down as CEO, EFG Hermes Acquires Egyptian Bank

The Top 5 Emerging Markets Stories from Global Media - May 20

  1. Bitcoin Gyrates on Fears of Regulatory Crackdown

    Financial Times

    “Cryptocurrency markets swung in chaotic trading and related stocks were hit after Chinese regulators signalled a crackdown on the use of digital coins, which have soared in price this year.”

    “Bitcoin tumbled as much as 30 per cent to a low of $30,101, before clawing back its losses to less than 8 per cent. Other digital coins were also hit by heavy selling, with ethereum, one of the best-performing cryptocurrencies in the past month, losing a quarter of its value before moderating to losses a little over 20 per cent. More than $8.6bn of positions have been liquidated over the past 24 hours, according to data from bybt.com, a cryptocurrency data provider.”

    The sharp moves came after the People’s Bank of China warned financial institutions about accepting cryptocurrencies as payment or offering related services and products, amplifying investor concerns that regulators could tighten oversight of the freewheeling asset class.” Thomas Hale, Tabby Kinder, and Philip Stafford report

  2. Asia Suffers Outbreaks Where Covid-19 Had Seemed Beaten

    The Wall Street Journal

    “For months, Covid-19 seemed to be all but gone from parts of Asia, where some of the world’s most successful battles to contain the coronavirus were waged. But several places are now struggling with new outbreaks.”

    “Taiwan, which last year had a stretch of more than eight months without any locally transmitted cases, set a single-day record with 333 of them on Monday. Vietnam, which had also squashed the curve, reported its highest case count a day earlier. Singapore banned dining-in at restaurants, closed schools and put limits on social gatherings after reporting double-digit increases in domestic cases for several days. Rapid transmission in Thailand’s prisons led to a record 9,600 new cases on Monday—surpassing the total number reported in 2020.”

    The new waves are nowhere near as devastating as India’s fierce outbreak or as past deadly surges in the West. But occurring in places that appeared to have beaten the virus, they show how difficult it is to keep Covid-19 suppressed while infections swell elsewhere in the world, more-transmissible variants take hold and vaccine rollouts fail to gather pace outside a clutch of wealthy nations.” Niharika Mandhana reports

  3. How Can Africa Tap its Huge Potential for Islamic Banking?

    African Business

    “Whether it is sheer coincidence or not, 2021 has seen a resurgent interest in Islamic finance in Africa. International ratings agencies Moody’s, Fitch, S&P and various multilaterals have all published reports highlighting its potential – but the take-up so far has been disappointing.”

    The Islamic finance industry in general has shown remarkable resilience in the wake of the Covid-19 pandemic. Not a single Islamic bank, worldwide, has collapsed over the last year. On the contrary, there have been creative consolidations through mergers: in Saudi Arabia (National Commercial Bank and Samba Financial Group), Indonesia (BNI Syariah and Bank Syariah Mandiri) and UAE (Dubai Islamic Bank and Noor Bank), creating mega challenger banks to the global majors.”

    “…However, the African reality is different. According to the Islamic Financial Services Industry Stability Report 2020, global sukuk outstanding totalled $543.4bn at end 2019, of which South East Asia and the Middle East accounted for $520bn. Africa accounted for a mere $1.8bn.”Mushtak Parker reports

  4. ByteDance Co-Founder Zhang Yiming to Hand over CEO Role

    Nikkei Asia

    “Zhang Yiming, one of the two co-founders of the global short-video sensation TikTok, told employees on Thursday that he will step down as chief executive at the app's parent company, ByteDance, by the end of this year and hand over the role to his university classmate Liang Rubo, the other co-founder.”

    “The 38-year-old software engineer by training said he will take up a new role, focusing on long-term strategy, corporate culture and social responsibility.”

    The decision comes at a time when China's technology conglomerates, including Alibaba Group Holding and Tencent Holdings, are facing greater regulatory scrutiny. Authorities in Beijing believe some of these companies have abused their technological advantages to achieve market dominance at the expenses of consumers and small businesses.” Nikki Sun reports

  5. EFG Hermes to Acquire Major Egyptian Bank

    Al-Arabiya/AP

    EFG Hermes Holding, Egypt’s biggest investment bank, will acquire 51 percent of state-owned Arab Investment Bank (AIB), the cabinet said in a statement on Wednesday, in the first bank privatization in more than a decade.”

    “Under the transaction, the Sovereign Fund of Egypt will also acquire a 25 percent stake in AIB, while the current owner, state-owned National Investment Bank, will retain 24 percent, the cabinet said after approving the acquisition.”

    “AIB’s capital will be increased to five billion Egyptian pounds ($319.90 million), it added. The government began a program of selling its stakes in banks in 2004, and in 2006 sold most of its fourth largest bank, Bank of Alexandria, to the Italian bank Sanpaolo IMI, now owned by Banca Intesa.”

    The central bank says it plans to sell stakes in several banks it owns, including Banque du Caire, Egypt’s third-largest state-owned bank, but plans were put on hold because of the COVID-19 pandemic.” Al-Arabiya/AP reports.


    Notable Quotable

    The International Energy Agency recently called on oil and gas producers to effectively stop all new projects for the world to meet 2050 emissions targets:

    “Effectively they are calling time on the fossil fuel era,” said Mark Lewis, chief sustainability strategist at BNP Paribas Asset Management. “It is like the pub landlord ringing the bell for last orders.” (Source: FT)


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