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Emerging Markets Daily - November 16
Germany Suspends Nord Stream 2, Biden-Xi Summit Cools Tensions, Saudi PIF Triples US Holdings, Iran Nuclear, Sara Duterte/Marcos Philippines Presidential Bid
The Top 5 Stories Shaping Emerging Markets from Global Media - November 16
Germany Suspends Nord Stream 2 Pipeline Certification, European Gas Prices Rise
“Germany’s energy regulator said it had ‘temporarily suspended’ certification of the Nord Stream 2 pipeline, dealing a setback to the Kremlin-backed gas project and sparking a rise in UK and continental European gas prices.”
“The regulator said it could not yet approve the project, led by Russia’s Gazprom, because its owners had chosen to create a German subsidiary branch that was not yet properly set up according to German law. The suspension comes at a critical time for European gas supply, with prices surging across the continent.”
“Gazprom has been accused by some countries of restricting exports to western Europe to increase pressure on Germany and accelerate approval of the project.”
“Nord Stream 2 would send 55bn cubic metres of gas per year under the Baltic Sea, allowing Gazprom to reach customers in Germany and elsewhere in Europe without using pipelines running through Ukraine.”
“Ukrainian officials have warned that Russia is in effect blackmailing Europe by restricting gas supplies, and that reducing its reliance on Ukraine could make it easier for Moscow to launch an invasion.”
“Russian president Vladimir Putin has consistently linked higher exports to approval of Nord Stream 2. Any delay is likely to increase fears that Russian flows will remain relatively low this winter.” Erika Solomon and David Sheppard report.
Biden-Xi Video Summit Goes Longer Than Expected, Cools Tensions
“U.S. President Joe Biden and Chinese leader Xi Jinping spoke of the need for cooperation in their first face-to-face summit, which went on longer than expected even though they announced no major breakthroughs.”
“The video conference lasted for more than three hours, with the two leaders covering a range of topics including trade, the status of Taiwan and human rights. A senior administration official afterward described the tone as respectful and open, with the conversation focused on action to manage the long-term competition between the world’s biggest economies.”
“The U.S. made clear ahead of the meeting that there would be no specific outcomes from the meeting, and that appeared to be the case. China’s official Xinhua News Agency said Xi’s government agreed to adopt an upgraded fast track for U.S. executives to enter China, one of the only concrete deliverables announced after the talks...”
“At the start of the meeting, Biden told Xi they had a responsibility to ensure that competition between the countries doesn’t veer into conflict. ‘It seems to me we need to establish some commonsense guardrails, to be clear and honest where we disagree, and work together where our interests intersect, especially on vital global issues like climate change,’ the U.S. president said.”
“Xi started his remarks by calling Biden an ‘old friend’ while saying the U.S. and China ‘need to increase communication and cooperation.’ The two nations should work to find effective responses to global challenges including climate change and the pandemic, Xi said.”
“The White House had framed the discussion as Biden’s effort to set the terms of the relationship, with a particular focus on avoiding unintended conflict… Xi came to the summit in a strong position politically, having cleared a major hurdle last week to securing a third term as Communist Party chief next year.” Bloomberg reports.
Saudi Wealth Fund Nearly Triples US Stock Holdings
“Saudi Arabia's sovereign wealth fund nearly tripled its holdings of US stocks to more than $43 billion in the third quarter, investing in a variety of companies from e-commerce and FinTech to biotechnology and fuel cell-powered commercial vehicles.”
“The Public Investment Fund, which manages more than $430bn in assets, increased its investments in US equities from about $15.94bn in the second quarter this year, according to a Securities and Exchange Commission filing.”
“The fund's investment in electric car company Lucid, which went public in July, is worth about $26bn. The fund had invested more than $1bn in the company in 2018 for a major stake. It currently owns about 63 per cent of the company. The PIF retained its 72.8 million shares in Uber, which were worth about $3.26bn at the end of the third quarter.”
“The fund bought about 3.56 million shares in image sharing and social media company Pinterest valued at about $182 million and shares in FinTech company PayPal worth $174m.”
“It also snapped up 1.6 million shares in Visa, the world's second-largest card payment company, valued at $358m, as well as shares in Chinese e-commerce company Alibaba worth about $100m and shares in Walmart valued at $231m.”
“The sovereign wealth fund lies at the centre of the kingdom's Vision 2030 plan to diversify the Arab world's largest economy and reduce its reliance on oil. Under a five-year strategy that was announced in January, the PIF aims to more than double the value of its assets under management to $1.07 trillion and to commit $40bn annually to develop Saudi Arabia's economy until 2025.” Massoud A. Derhally reports.
Geopolitics: Iran Resumes Advanced Nuclear Parts Production
Wall Street Journal
“Iran has resumed production of equipment for advanced centrifuges at a site the United Nations’ atomic energy agency has been unable to monitor or gain access to for months, said diplomats familiar with the activities, presenting a new challenge for the Biden administration as it prepares for nuclear talks.”
“The renewed work has raised fresh concerns among Western diplomats who say it could allow Iran to start secretly diverting centrifuge parts if Tehran chose to build a covert nuclear-weapons program, although they say there is no evidence at this point that it has done so.”
“Iran resumed work on a limited scale in late August at an assembly plant in Karaj, a city west of Tehran, and has since accelerated its production, allowing it to manufacture an unknown number of rotors and bellows for more advanced centrifuges, diplomats said. Iran had stopped work at Karaj in June after a sabotage attack that Tehran blamed on Israel, which hasn’t acknowledged responsibility.”
“According to the diplomats, Iran has now produced significant amounts of centrifuge parts since late August, with one of the diplomats saying it has produced parts for at least 170 advanced centrifuges. Centrifuges are used to spin enriched uranium into higher levels of purity either for civilian use or, at 90% purity, for nuclear weapons.”
“Iran has withdrawn from most commitments under the 2015 nuclear deal since the Trump administration reimposed sweeping sanctions in November 2018. In February, Iran scaled back International Atomic Energy Agency oversight of many of its nuclear-related sites, including Karaj, but agreed to keep agency cameras and recording devices in place at Karaj and a series of other sights.” Laurence Norman reports.
Sara Duterte To Ally with Son of Late Dictator Marcos in Presidential Bid
“The daughter of President Rodrigo Duterte on Tuesday said she will run for vice president in next year's elections together with presidential hopeful Ferdinand Marcos Jr., the son and namesake of the late Philippine dictator.”
“Sara and Marcos, who have performed strongly in opinion polls, are seen as a formidable pair in an election that will test the public's appetite for change after six years of Duterte's presidency.”
“Duterte's administration has pursued a bloody war on drugs that has drawn an International Criminal Court investigation and a foreign policy pivot to Beijing that unsettled Washington, Manila's traditional ally. Marcos is generally supportive of Duterte's policies, including forging closer ties with China.”
“Teaming up with Sara boosts the chances of Marcos, who is seeking his family's return to power after his late father was ousted in the 1986 People Power revolution, ending his two-decade rule. Marcos's party, Partido Federal ng Pilipinas, did not have a vice-presidential candidate. It chose the presidential daughter as Marcos's running mate on Saturday when she filed her candidacy for the country's second-highest office.”
“Sara Duterte's Lakas-CMD party, meanwhile, does not have a presidential contender. The president and vice president are elected separately in the Philippines.” Cliff Venzon reports.
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