Emerging Markets Daily - May 30
Oil Growth Stalls Outside OPEC+, Angola's Reforms, Chinese Tech Co's Lose $800B in Market Cap, New Oxygen Crisis Looms in E. Africa, Argentina Second Wave, Lockdowns Roil Politics
The Top 5 Emerging Markets Stories from Global Media - May 30
This Time Is Different: Outside OPEC+, Oil Growth Stalls
Bloomberg
“This time is different” may be the most dangerous words in business: billions of dollars have been lost betting that history won’t repeat itself. And yet now, in the oil world, it looks like this time really will be.”
“For the first time in decades, oil companies aren’t rushing to increase production to chase rising oil prices as Brent crude approaches $70. Even in the Permian, the prolific shale basin at the center of the U.S. energy boom, drillers are resisting their traditional boom-and-bust cycle of spending.”
“The oil industry is on the ropes, constrained by Wall Street investors demanding that companies spend less on drilling and instead return more money to shareholders, and climate change activists pushing against fossil fuels. Exxon Mobil Corp. is paradigmatic of the trend, after its humiliating defeat at the hands of a tiny activist elbowing itself onto the board.”
“Beyond 2021, oil output is likely to rise in a handful of nations, including the U.S., Brazil, Canada and new oil-producer Guyana. But production will decline elsewhere, from the U.K. to Colombia, Malaysia and Argentina…”
“The dramatic events in the industry last week only add to what is emerging as an opportunity for the producers of OPEC+, giving the coalition led by Saudi Arabia and Russia more room for maneuver to bring back their own production. As non-OPEC output fails to rebound as fast as many expected -- or feared based on past experience -- the cartel is likely to continue adding more supply when it meets on June 1.” Javier Blas reports
Angola’s Reforms Proceed Amid Challenges, Oil Sector Attracting Renewed Interest
African Business
“João Lourenço’s presidency was hailed as a new dawn for Angola. The former defence minister promised to stop the rot in Africa’s second largest oil producer after 38 years of tightly controlled family rule under former strongman President José Eduardo dos Santos.”
“When he came to office in 2017, the president pledged to diversify the economy away from oil, increase foreign and domestic investment and champion private sector development. The pandemic has dealt these projects a significant setback, but the administration has managed to retain its shine.”
“‘The government is on the right track and has a bright future ahead,’ says Gonçalo Falcão, who heads the Angola practice of US law firm Mayer Brown. ‘Angola is going through a major economic transformation, in the sense of trying to finally open its economy totally to foreign investment in the quest for economic diversification, and an end to oil dependence.’
“Since gaining power, Lourenço has made sweeping legal reforms to wean Angola off the dwindling yields of its oil industry. In a process that will take decades, the country has eased restrictions on foreign and domestic investment in strategic sectors such as mining and telecoms...”
“Starting in 2018, a suite of reforms to the oil and gas sector’s tax laws have tempted international oil and gas companies to take a fresh look at Africa’s second-largest oil producer after Nigeria, says Falco.”
“The reforms underpin a privatisation plan to kickstart the economy by selling off key state assets…So far 39 sales have taken place, according to Bloomberg. Among the initial plans was an initial public offering by Sonangol by 2022, and stake sales in more than 100 other enterprises, although Covid has complicated the outlook.” Shoshana Kedem reports
Value of 10 Chinese Tech Majors Fall Over $800bn Since February
Nikkei Asia
“China's once-popular technology companies are losing their shine, with their share prices plunging over the last few months, as investors grew nervous of government clampdowns in the sector.”
“The combined market capitalization of 10 leading IT and high tech companies, including Alibaba Group Holding and Tencent Holdings, has plunged by nearly 90 trillion yen ($828.57 billion) or almost 30% from a peak in February.”
“The Science and Technology Innovation Board, better know as the STAR board and home to some of the most prominent tech companies in China, is now hovering in a low range.” Yusho Cho reports
‘India's Oxygen Crisis Could Spread to East Africa’
El Pais
“Dr. Philippe Duneton, Executive Director of UNITAID, examines efforts to prioritize this simple and complex tool at the same time. He assures that vaccines are not enough against the pandemic, the fight must be comprehensive.”
“Half a million people need medical oxygen on a daily basis, according to the WHO. More than a million bottles are essential every day. The covid-19 pandemic has exacerbated one of the simplest and most complex needs of health systems. Even before the global health crisis, it was one of the main tools to treat, for example, the world's deadliest infectious disease, which claims 800,000 children's lives annually: pneumonia.”
“…But in addition to infrastructure, investment and human resources, spaces must be provided in which those who decide and develop the demand are the affected populations and countries themselves. That is why we work assisting countries in assessing needs and adapted responses. The situation in India may expand to Pakistan or Bangladesh, as well as East Africa, Well, it is an area in which there are many connections with countries such as Ethiopia or Kenya, for example. We also have to attend to what is happening in Latin America. We have seen very serious situations in Brazil or in Peru , for example.” Francisco Javier Sancho More reports (in Spanish)
New Lockdowns Anger Argentines, Roil Politics Amid Glacial Vaccine Roll-Out and Second Wave
Financial Times
”Shortly after beginning to loosen one of the longest and strictest lockdowns in the world, President Alberto Fernández promised in December that 10m Argentines would be vaccinated against Covid-19 by the end of February. Months later, that promise has still not been fulfilled.”“Just 9m of Argentina’s 45m inhabitants have received one dose, of whom about 2.5m have received a second. Critics say a faster vaccine rollout could have helped to avoid one of the highest daily death rates in the world, as a second wave sets in.”
“Now Argentina is in lockdown again to combat a steep rise in cases, which have reached new highs as it heads into winter and more contagious variants from Brazil and the UK spread.”
“The new lockdown has put pressure on public finances that are stretched to the limit, threatening to extend a recession that has been dragging on for three years. It has also aggravated an already poisonous political environment, as recriminations fly over the missed vaccine deadline.”
“On Monday, Fernández sued Patricia Bullrich, a leading opposition politician, for defamation after she insinuated that the government had sought bribes from Pfizer, the US vaccine maker, in return for access to the Argentine market.” Benedict Mander reports.