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Emerging Markets Daily - October 14
Tech's New Frontier: LatAm, Saudi Free Zones, Turkey's Lira Hits New Low, Gunfire Kills Several in Lebanon Protests, Standard Chartered Says Crypto 'Here to Stay'
The Top 5 Stories Shaping Emerging Markets from Global Media - October 14
Tech’s New Big Frontier: Latin America
“Buying a used car, renting an apartment or opening a bank account: all recurring nightmares in Latin America, because of reams of paperwork, lethargic bureaucracy and legal pitfalls.”
“Start-ups created to tackle problems like these are propelling the region to the forefront of the emerging market tech boom. Last year $4.1bn of venture capital investment flowed into Latin America, exceeding south-east Asia’s $3.3bn and beating Africa, the Middle East and central and eastern Europe combined, according to the Global Private Capital Association.”
“In the first half of this year, Latin America pulled in $6.5bn of venture capital, not far short of India’s $8.3bn. ‘We started in this industry in 1999 when there was hardly any internet, almost all the connections were dial-up and internet penetration was 3 per cent,’ said Hernán Kazah, co-founder of Kaszek Ventures, Latin America’s largest early-stage fund with more than $2bn of capital raised to date. ‘Today, Latin America finally has critical mass in almost every market.’”
“Nubank exemplifies the new breed of Latin American start-up. Co-founded in 2013 by Colombian entrepreneur David Vélez after it took him six months to open a bank account when he moved to São Paulo, it has grown exponentially and now has more customers than any other standalone digital bank in the world.”
“A forthcoming IPO could value the Brazilian fintech at more than $50bn, according to recent reports. That compares with the $79bn value of Mercado Libre, the region’s answer to Amazon and Latin America’s most valuable company, founded in 1999 in a first wave of tech activity.” Michael Stott reports.
Saudi Arabia Mulls Free Zones for Cloud Computing, Health Care and More
“Saudi Arabia plans to create special economic zones offering incentives to invest in sectors including health care, manufacturing and cloud computing.”
“More details about the zones and the incentives they’ll offer will be announced once they receive final approval later this year or early next, the kingdom’s investment minister, Khalid Al-Falih, said at an event in Riyadh on Monday. Officials are also willing to review taxes and fees and grant limited exemptions to boost the country’s competitiveness, he said.”
“Investment in the kingdom has been ‘less than hoped for,’ Al-Falih said. ‘We want to import capital -- and bring back Saudi capital that didn’t find opportunities inside our kingdom.’”
“The foreign investors that Saudi officials want to attract are those who will help transfer technology and expertise to Saudis, he added. One focus is health-care, life sciences and biotechnology, with the goal of becoming a global destination for businesses by offering research and development zones and manufacturing hubs, said Sara Althari, an adviser at the ministry.” Vivian Nereim reports.
Turkey’s Lira Hits New Record Low as Erdogan Dismisses More CB Officials
“Turkey's President Recep Tayyip Erdogan dismissed three central bank monetary policy committee members on Thursday, appointing two new members in their place and sending the lira to fresh record lows…”
“The lira weakened to a record low of 9.1900 against the dollar after the announcement, a loss of 1 per cent on the day. It has weakened about 19 per cent so far this year, driven by concerns about monetary policy.”
“The MPC overhaul came after the presidency said on Wednesday evening that Mr Erdogan had met Central Bank Governor Sahap Kavcioglu, publishing a photo of Mr Erdogan standing next to him.”
“Last month the central bank cut its key rate to 18 per cent from 19 per cent, despite annual inflation of nearly 20 per cent, in a move analysts viewed as fresh evidence of political interference by Mr Erdogan, a self-described enemy of interest rates.” Daren Butler reports.
Gunfire Kills Several Amid Lebanon Protests
“Gunfire has killed at least six people and wounded more than 30 others in Beirut, according to the Lebanese Red Cross, as a rally organised by the Hezbollah and Amal movements to demand the dismissal of the lead investigator into last year’s port explosion turned violent.”
“Hundreds of protesters gathered at the Beirut Palace of Justice on Thursday, calling for the removal of Judge Tarek Bitar, accusing him of political bias. Bursts of gunfire were heard coming from the nearby Tayyoune neighbourhood, scattering the angry protesters. Clashes between seemingly rival factions continued for at least four hours.”
“Prime Minister Najib Mikati called for the restoration of calm and warned against attempts to drag Lebanon into violence.” Al Jazeera reports, with live updates.
Standard Chartered Says Crypto ‘Here to Stay’
South China Morning Post
“Cryptocurrencies are ‘here to stay’ and have an important role to play in financial markets going forward, according to Standard Chartered CEO Bill Winters.”
“However, they are likely to be surpassed in terms of growth and importance by other types of digital assets in the future, such as stablecoins, central bank digital currencies or, even, non-fungible tokens (NFTs).”
“‘I think there’s a role for non-fiat currencies, especially when parts of the market are concerned about inflation,’ Winters said on a conference call following the bank’s Innovation and Digitisation Event on Wednesday. ‘Broadly we’ve gone through long period of low inflation and we’ve got central banks experimenting in uncharted territory with very, very loose monetary policy. It’s perfectly reasonable for people to want an alternative to fiat currency...’”
“Winters said the bank wants to generate half of its income in the medium term from its efforts to digitise and transform its core business, including ventures such as Zodia in London, its virtual bank Mox in Hong Kong and Solv, its business-to-business e-commerce platform in India.”
As part of ongoing efforts to reshape the bank, Standard Chartered, one of Hong Kong’s three currency-issuing lenders, plans to rebalance its internal investment spending and double its spending on strategic initiatives to US$1 billion annually.”
“‘Our innovation is not something off to the side. It is not something in addition to our ongoing transformation of the bank,’ Winters said. ‘It is at the heart.’” Chad Bray reports.
“And those who were seen dancing were thought to be insane by those who could not hear the music.” - Friedrich Nietzsche