Discover more from Emerging World
Emerging Markets Daily - May 21
World's Largest Companies Get Bigger, Southeast Asia SuperApp Wars, Safaricom Eyes Ethiopia Mobile Money Market, Russian Grocery 'Battle Royale', Abu Dhabi Opens to Foreign Ownership
The Top 5 Emerging Markets Stories from Global Media - May 21
World’s Most Dominant Companies Post-Covid: Bigger, Techier, and More Chinese
“The world’s biggest businesses were doing fine until Covid-19 arrived. Now they’re doing even better.”
“The top 50 companies by value added $4.5 trillion of stock market capitalization in 2020, taking their combined worth to about 28% of global gross domestic product. Three decades ago the equivalent figure was less than 5%.”
“That’s just one measure of how superstar firms have come to dominate the world economy, according to a new study by Bloomberg Economics that maps out their changing role. The findings provide ammunition for policymakers bent on reining in the giants—including a U.S. government that’s seeking to rally global support for higher levies on corporate profits…”
“In 1990, there were no Chinese businesses among the top 50 exchange-traded companies; last year there were 8. China’s gains have come largely at the expense of European enterprises, whose presence on the list has shrunk from 15 to 7 over the period.”
“Alongside the shifting geography of the world economy, the Bloomberg Economics study also captures a profound change in what the biggest companies do. Technology dominates the top of the list, and fossil fuel companies—with the exception of Saudi Arabia’s flagship Aramco—have dropped off.”
“The extraordinary growth of tech companies in particular is what’s spurring government action. They’re in the crosshairs of politicians and regulators almost everywhere. That includes China, where regulators blocked a proposed initial public offering by Jack Ma’s Ant Group, slapped record fines on affiliates including Alibaba Group Holding, and have extended the crackdown to other tech giants like Tencent Holdings.” Bloomberg reports.
Southeast Asia’s Superapp ‘Battle Royale’ Heat Up
“How many winners can take all in any given internet market? Two recent events brought that question into focus in the promising Southeast Asia region.”
“Indonesia-based rides and deliveries powerhouse Gojek merged with e-commerce player Tokopedia to form GoTo Group. Sea (ticker: SE), whose online games and Shopee merchandise site already have regional reach, reported a 147% year-over-year jump in first-quarter revenue, its 11th straight quarter of triple-digit top line growth.”
“The two face formidable competition in Grab, another ride-hailing group that initiated a merger via a special purpose acquisition company, or SPAC, and is expected to trade on Nasdaq this summer; and Lazada, a subsidiary of Chinese e-commerce giant Alibaba Group Holding (BABA). A GoTo IPO is expected later this year. ‘These big four are plying their wares in basically the same sandbox,’ says Brendan Ahern, chief investment officer at exchange-traded fund provider KraneShares. ‘It’s a battle royale.’”
“Chinese internet has been the most exciting story in emerging markets for many years. It’s showing its age a bit. China does more than a third of its shopping online now, compared with single digits for Indonesia, Southeast Asia’s most populous nation with 274 million, or the Philippines, home to 108 million. Alibaba’s revenue grew by a mere 40% in the latest quarter. ‘China has emerged. A lot of other places are still emerging,’ says Andy Tian, CEO of Asia Innovations Group.” Craig Mellow reports.
Safaricom Eyes Potential Mobile Money Opening in Ethiopia
The East African
“Safaricom is still hopeful that it will launch mobile money services in Ethiopia as it awaits the decision on the acquisition of a licence to operate in the country.”
“The telco’s bid for control of the Ethiopian telecommunication market seems to have received a boost ahead of the official acquisition of the licence with the news that the Addis administration plans to liberalise mobile money services next year.”
“Prime Minister Abiy Ahmed said mobile-based financial services in Africa’s second most populous country will be opened to competition in the next 12 months, setting the stage for Safaricom to launch M-Pesa platform, which is a key driver of its revenues.”
“In April 2020, Addis indicated that only local companies would be allowed to offer mobile money transfer services in the country after the central bank sought to boost non-cash payments.”
“Safaricom declined to comment on the mouth-watering proposal ahead of the conclusion of its bid for the Ethiopian telecom licence, but the management remains optimistic that the proposal will open up opportunities for growth and investment for a teleco that is in the process of transforming into a technology company.” James Anyanzwa reports.
Top Russia Grocery Stores Buy Up Rivals in War for Market Share
“Two of Russia’s top supermarket chains have announced multi-million dollar deals to buy out competitors this week as they vie to boost their footprints in Russia’s lucrative grocery industry.”
“Magnit — the single largest supermarket brand in Russia — inked a 92-billion ruble ($1.25 billion) deal Tuesday to buy out the discount Dixy retail chain, while Lenta signed Wednesday to buy out the Billa chain of stores for 215 million euros ($263 million).”
“The deals are the biggest changes in Russia’s grocery market for years and signal the start of what analysts and company insiders say could be a new wave of consolidation and competition for market share among the top players.”
“‘When we compare the Russian market with that of western Europe, the Russian market is far more fragmented,’ Lenta CFO Rud Pedersen told The Moscow Times. Russia’s five largest grocery chains control less than a third of the entire market — half the comparable market share in many western European countries. ‘There will be consolidation,’ Pedersen said.”
“Alongside mergers and acquisitions to grab more physical shelf space, Russia’s traditional offline supermarket chains also face a challenge from new market entrants — the country’s leading technology firms such as Yandex, Mail.Ru and Ozon, who are all investing heavily in the online food retail industry, prioritizing rapid grocery services that promise delivery within minutes.”
“Under its deal announced Tuesday, Magnit is set to acquire more than 2,600 Dixy stores for 92 billion rubles ($1.25 billion). Half of the stores will be in Moscow and another 18% in St. Petersburg — ‘an aggressive move into regions in which Magnit traditionally struggles,’ VTB Capital’s Maria Kolbina said.”
“Getting a sizable presence in the Russian capital could be crucial in Magnit’s battle to overhaul rival X5 Retail Group’s position as Russia’s largest grocery conglomerate in the country.” Jake Cordell reports.
Abu Dhabi Announces Sectors Open to Full Foreign Ownership
“The Abu Dhabi Department of Economic Development revealed a list of 1,105 registered commercial and industrial activities that are now open to partial or full foreign ownership in the emirate. The move follows the UAE's step to allow full foreign ownership of onshore companies from June 1.”
“‘This announcement of the list of economic activities available for foreign ownership reflects the keenness of the Abu Dhabi government to attract further foreign direct investments and to promote an open and resilient competitive business environment,’ Mohammed Al Shorafa, chairman of ADDED, said in a statement on Thursday.” The National reports.