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Emerging Markets Daily - May 7
Vietnam Infrastructure Plan Cheers Investors, Modi Popularity Falls, Macron vs Erdogan, WHO Approval for Chinese Vaccine To Spur Mideast-Europe Travel, World Turns to China Vaccines
The Top 5 Emerging Markets Stories from Global Media - May 7
Vietnam’s Big Infrastructure Plans Excite Investors
“Communist Party congresses don’t usually excite financial markets. Vietnam’s confab three months ago looks like an exception. Party leaders committed to an anti-Communist boost for the country’s private sector, to 55% from 42% of gross domestic product by 2025. They earmarked $119 billion for infrastructure over the same four years. That’s one-third of 2020 GDP, or about $7 trillion on a U.S. scale.”
“Investors apparently liked the message. The VanEck Vectors Vietnam exchange-traded fund (ticker: VNM) is up 9% since the Congress wrapped on Feb. 2. Global emerging markets are down 2%…”
“Pouring cash into improvements should enable the government to achieve its 6.5% to 7% annual growth targets while boosting profits for appropriately positioned companies, says Bill Stoops, chief investment officer at Dragon Capital in Ho Chi Minh City. ‘We’re playing the interlocked sectors of property, banks, and steel,’ he says.”
“Dragon’s United Kingdom–listed Vietnam Enterprise Investments fund has gained 17% this year, twice the rise of the VanEck ETF, largely thanks to an Overweight in steelmaker Hoa Phat Group (HPG.Vietnam). ‘This may be the only exciting steel company in the world,’ Stoops says. ‘They can add capacity without spending much money.’” Craig Mellow reports.
Modi’s Popularity Falls Amid Gathering Covid Storm
”Narendra Modi’s popularity has fallen during India’s deepening Covid crisis, according to an opinion poll, as the country reports more than 400,000 daily infections in a brutal second wave.”
“The prime minister’s approval rating fell to 65 per cent on May 4, down from 74 per cent at the end of March, according to Morning Consult, the US data company — the lowest level since the agency began tracking Modi’s rating in August 2019.”
“The Indian leader’s disapproval rating also rose to its highest level since the tracker was launched, climbing to 29 per cent from 20 per cent. Modi’s approval rating remained high compared with other global leaders, but the country’s health and humanitarian crisis has taken a toll.”
“The prime minister has a strongman reputation but has been accused of indifference in the face of the Covid-19 disaster as he campaigned in state elections even as the outbreak worsened. ‘One of the things that Modi has really been good at is perception management. He’s always been very good at messaging,’ said Ronojoy Sen, senior research fellow at the Institute of South Asian Studies in Singapore. ‘This is the first time I would say that his messaging has been awry.’” Amy Kazmin and Benjamin Parkin report.
Macron vs Erdogan: A Personal Feud Wth Geopolitical Implications
“The personal feud between Emmanuel Macron and Recep Tayyip Erdogan is developing into a long-term geopolitical rivalry between France and Turkey, a report said. The presidents clashed over a series of issues including Libya, Syria, the Eastern Mediterranean and cartoons of the Prophet Mohammed.”
“At the height of their quarrel last year, Mr Erdogan suggested that the French leader needed mental help over his attitude towards Muslims. Germany this week sought to offer a European olive branch to Turkey, telling Ankara that it could send a positive signal to the EU by pulling its troops out of Libya.”
“But a report by the French Institute of International Relations said it was unrealistic to expect improved relations with France because ‘Macron vs Erdogan is a fight both leaders want ahead of elections in their countries’ Mr Macron is up for re-election in 2022 and faces a potential rematch with far-right candidate Marine Le Pen. Mr Erdogan’s next election is in 2023.”
“The IFRI report said the political rift was ‘gradually turning into a long-time geopolitical rivalry’ in which France sees itself as a defender of Europe.” Tim Stickings reports.
WHO Approval for China Vaccine Could Boost Mideast-Europe Travel
“The imminent World Health Organisation (WHO) approval of China’s Sinopharm vaccine will be a welcome relief for Middle East travellers and European economies alike, according to Bruno Trenchard, senior manager, Hotels and Hospitality, CBRE Middle East as the EU prepares to potentially ease restrictions on non-essential travel from overseas.”
“Under current guidelines the European Union only permits non-essential travel from seven countries, although new plans being discussed will see anyone who has received both doses of an EU-approved vaccine at least two weeks beforehand, being allowed to travel.”
“It was announced earlier this week that members of the EU will be able to accept tourists from outside the jurisdiction as long as they have received an approved vaccine, although this could be extended to include vaccines which have been passed by the WHO’s emergency listing process.” Gavin Gibbon reports.
The World Turns to China for Vaccines as US, India Falter on Supply
“The world is fast becoming ever more reliant on China for vaccines, with India’s raging virus outbreak stifling its ability to deliver on supply deals, even as the U.S. tries to position itself as a champion of wider access.”
“Over the past few weeks, leaders of some of the globe’s most populous nations have sought more shots from China despite concerns about their effectiveness. Demand is expected to rise even further if the World Health Organization, as expected, authorizes vaccines from China’s Sinovac Biotech Ltd. and Sinopharm Group Co. Ltd., allowing developing countries in Asia, Africa and Latin America to access them through Covax, the global vaccination effort.”
“‘China has become not just the largest exporter,’ said Yanzhong Huang, a China specialist and senior fellow for global health at the Council on Foreign Relations. ‘In many countries it has become the only option.’
“China’s reliability as a vaccine supplier is increasing its geopolitical clout at a time when the U.S. and the EU have been slow confronting the global pandemic as Covid hot spots rage out of control in India, Brazil and elsewhere. Compounding the difficulties, India’s crisis has dried up vaccine supplies and prompted many countries to turn toward China. Amid this backdrop, the U.S., for months preoccupied with its domestic vaccination push, has come under intense criticism for hoarding shots at the expense of a global response.” Iain Marlow, Sudhi Ranjan Sen, and James Paton report.