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Emerging Markets Daily - October 5
Asia Tech Rout Deepens, Global Energy Crunch & OPEC+ Push US Oil To 7 Year High, South Asia Crypto, Malaysia-China Tensions, W. Africa's Newest Unicorn
The Top 5 Stories Shaping Emerging Markets from Global Media - October 5
Asia Tech Rout Deepens; China Index Closes Near Record Low
“The global selloff in technology stocks deepened in Asia on Tuesday amid investor fears of higher interest rates, with a benchmark tracking Chinese technology stocks in Hong Kong closing near a record low.”
“The Hang Seng Tech Index, which officially launched in July last year, fell 0.3% after paring earlier losses of as much as 2.5%. The gauge, which counts Tencent Holdings Ltd. and Alibaba Group Holding Ltd. as key members, is headed for a fourth consecutive weekly decline.”
“Megacap technology stocks that rallied through the pandemic have declined as increased regulatory oversight and a sudden spike in yields triggered investor fears of a bubble. Chinese companies, already caught up in Beijing’s regulation drive, have been hit especially hard.” Abhishek Vishnoi reports.
US Oil Hits 7 Year High As Opec+ Resists Calls to Accelerate Production
“US oil prices rose to the highest level in seven years after Opec and its allies declined to accelerate plans to increase crude production, snubbing calls from the White House to help tackle a growing global energy crunch.”
“Europe and Asia have been gripped by tight energy supplies that have pushed natural gas and coal prices to the highest level on record, while oil prices have been rising steadily as the world economy has rebounded from the depths of the coronavirus pandemic.”
“But the expanded Opec+ group, which has included Russia since 2016, said on Monday it would stick with a plan formulated this summer of only gradually increasing oil production by 400,000 barrels a day each month, despite warnings of a growing deficit between supply and demand.”
“The decision threatens to raise tensions between large energy consumers such as the US, Europe and China, which fear energy cost inflation could derail their economic recovery, and the expanded producer group, which controls more than half of global oil supplies.”
“US oil benchmark West Texas Intermediate jumped 3 per cent after the meeting to more than $78 a barrel for the first time since 2014, while Brent crude, the international marker, rose to $82 a barrel for the first time in three years.” David Sheppard and Tom Wilson report.
India Crypto Market Grew 641% Last Year; Pakistan Grew 711%
“India, Vietnam and Pakistan are helping to lead the expansion of cryptocurrency markets in central and southern Asia, according to Chainalysis.”
“India’s market grew 641% over the past year and Pakistan’s 711%, a report from Chainalysis showed, using a metric that estimates the total cryptocurrency received by a country.”
“India has a 59% share of activity taking place on decentralized finance (DeFi) platforms, with Pakistan at 33%, the report said, adding there’s been a significant increase in cryptocurrency-related entrepreneurship and venture capital investment in the region.”
“‘Large institutional-sized transfers above $10 million worth of cryptocurrency represent 42% of transactions sent from India-based addresses, versus 28% for Pakistan and 29% for Vietnam,’ the report said. ‘Those numbers suggest that India’s cryptocurrency investors are part of larger, more sophisticated organizations.’” Joanna Assigner reports.
Geopolitics: Malaysia Summons China Envoy Over S. China Sea Incursion
Straits Times (Singapore)
“Malaysia late Monday (Oct 4) summoned Beijing's envoy to the South-east Asian country in protest after Chinese vessels entered its maritime economic zone in the disputed South China Sea.”
“Kuala Lumpur summoned Chinese ambassador Ouyang Yujing ‘to convey Malaysia's position and protest against the presence and activities of Chinese vessels, including a survey vessel, in Malaysia's Exclusive Economic Zone’, the foreign ministry said in a statement.”
“The ministry accused China of going against local and international law with the presence of its ships off the coast of Sabah and Sarawak states, on the Malaysian part of Borneo island.”
“Malaysia-China relations are usually warm but have been ruffled by recent tension-raising incidents over the sea, which is home to key shipping lanes and is believed to harbour rich oil and gas deposits.” AFP/Straits Times report.
Meet West Africa’s Third Unicorn: $1.5 Billion Andela
“Tech firm Andela, which matches software developers from Africa and other emerging markets with global clients, has won unicorn status after raising $200m in a Series E funding round led by Japan’s Softbank Group.”
“With a $1.5bn valuation, the Nigerian startup joins Senegal’s Wave and Nigeria/US-based Flutterwave as the West African unicorns of 2021. The latest funding allows the company to invest further in its AI software which the company says makes hiring quicker and easier by providing millions of data points to guide companies on where an individual would be most successful.”
“‘Five years from now it will be easier to push a button and have talent readily available to you than it will be to go out and try to recruit locally,’ Andela’s CEO and co-founder Jeremy Johnson told CNBC Africa.” Shoshana Kedem reports.
“It’s never too late to be what you might have been.” - George Eliot
What We’re Also Reading…
Empty Buildings in China Provinces Reflect Evergrande Debacle
Wall Street Journal
“Rows of residential towers, some 26 stories high, stand unfinished in this provincial city about 350 miles west of Shanghai, their plastic tarps flapping in the wind.”
“Elsewhere in Lu’an, golden Pegasus statues guard an uncompleted $9 billion theme park that was supposed to be bigger than Disneyland. A planned $4 billion electric-vehicle plant, central to local leaders’ economic dreams, remains a steel frame with overgrown vegetation spilling into the road.”
“The structures are monuments to the once-grand ambitions of China Evergrande Group,now among the world’s most indebted property companies, and a case study in how China’s dependence on real estate as an economic engine helped feed those ambitions.”
“Evergrande is in trouble in part because it developed properties aggressively in places such as Lu’an, where its debt-fueled building spree came as the city’s population dwindled. It launched hundreds of projects across more than 200 Chinese cities.”
“As it expanded, Evergrande racked up more than $300 billion in liabilities. In September, it said it was facing unprecedented difficulties and was trying to protect customers. Days later, it missed a scheduled interest payment to overseas bondholders. On Monday, Evergrande and its property-management unit halted trading in Hong Kong; the unit said it could be subject of a takeover bid, which could bring in much-needed cash for Evergrande.” WSJ reports.