Emerging Markets Daily - Sept 6-7

Sberbank Aims to Be Russia's Amazon, Guinea Coup Rattles Metals Markets, ADQ To List Abu Dhabi Ports, El Salvador Adopts Bitcoin, Ola CEO Says India On Move Again

The Top 5 Stories Shaping Emerging Markets - September 6-7

  1. Russia’s Sberbank Aims to Become Russia’s Amazon

    Financial Times

    “For years, Sberbank thought its thousands of green-liveried branches across Russia were holding it back from becoming a global tech leader, and spoke of closing them as customers migrated online. But the branches, once relics of the time when Sberbank was the Soviet Union’s only savings bank, are now key to the state-owned lender’s ambitions to create a ‘Russian Amazon’, repurposed as hubs for last-mile ecommerce delivery…”

    The idea — which Sberbank admits will not deliver significant profits for years — has proved controversial in some corners of the Russian government. Officials believe the group’s duty is to boost the dividend payouts that power President Vladimir Putin’s spending promises.”

    But the giant lender believes that entering the race to create such an ‘ecosystem’ is vital to its survival, as the tech industry encroaches on its financial turf. Eventually Sberbank wants to combine the 40 or so companies involved into a China-style super app.

    “Lev Khasis, the first deputy chief executive in charge of Sberbank’s ecosystem push, frames the move as a national security priority at a time when Russia is increasingly worried about its dependence on western tech. ‘Ecosystems are growing all over the world. If there won’t be any Russian ecosystems, then Russians will be forced to live in American or Chinese networks,’ Khasis said in an interview.

    “‘Apple have their own ecosystem based on monopoly access to popular devices. Google and its systems are an ecosystem. You have Facebook. They’re all developing ecommerce and payment systems and so on in their services. So if you don’t grow your own, you have to use someone else’s.’” Max Seddon reports.

  2. Guinea Coup Rattles Iron Ore and Bauxite Markets


    “A military junta claimed to have seized control in the West African country of Guinea and detained President Alpha Conde, casting uncertainty over key bauxite and iron ore supplies.”

    The coup, carried out on Sunday by an elite special forces unit led by 41-year-old Col. Mamady Doumbouya, is the latest in a series of power grabs in the region over the past year, including in nearby Mali and Chad.

    “Doumbouya has claimed the army was forced into action amid rampant corruption, human rights abuses and economic mismanagement under Conde, but the move has been condemned by the U.N., the African Union and regional body ECOWAS.”

    “The elite unit on Monday allowed travel to resume through checkpoints in the capital of Conakry, barred government officials from foreign travel and lifted a curfew in mining areas.”

    What’s more, it has imperiled minerals and mining endeavors which are crucial to the country’s economy and global supply chains, according to experts.”

    “Guinea’s 110-kilometer Simandou range hosts one of the largest untapped iron ore deposits in the world, containing more than 8.6 billion tons of ore with an average 65% iron content, according to the country’s National Institute of Statistics.” Elliott Smith reports.

  3. ADQ Plans to List Abu Dhabi Ports on Local Exchange Amid Pipeline of New IPOs


    “Sovereign wealth fund ADQ plans to list Abu Dhabi Ports on the emirate’s exchange before the end of the year, the latest in a series of planned share sales on the bourse.” 

    “The listing on Abu Dhabi Securities Exchange is expected to comprise a sale of a portion of existing shares to investors in the United Arab Emirates, according to a statement on Tuesday.” 

    Abu Dhabi is set to list its ports operator a year after neighboring Dubai took DP World private, one of several delistings from the local bourse.” 

    “By contrast, authorities in Abu Dhabi, the wealthiest of the seven emirates that make up the UAE, have been pushing to revive IPOs on its bourse. The exchange -- also owned by ADQ -- is offering sweeteners that include flexibility on the minimum stake size required for share sales and promising to reduce or forgo listing fees. The bourse may see at least 10 new listings this year, which would be the most on record, its chairman said in May.”

    “On Monday, Abu Dhabi National Oil Co. said it’s planning to sell shares in its drilling unit in what would rank among the largest initial public offerings in the UAE.” Adveth Nair reports. 

  4. El Salvador First to Adopt Bitcoin as an Official Currency

    The Verge

    “As of today, Bitcoin is an official currency of El Salvador alongside the US dollar, after the Central American country became the first to adopt the cryptocurrency as legal tender. At three minutes to midnight local time, the country’s populist president Nayid Bukele tweeted that the country was about to ‘make history’ with the move, after previously confirming that it had purchased 400 Bitcoins, the equivalent of around $20.9 million at today’s prices.” 

    Supporters argue the move will make it cheaper and easier for migrants to send money home to El Salvador, which is important given such remittances account for over 24 percent of the country’s gross domestic product, according to figures from the World Bank reported by CNBC.”

    “There are also hopes the move could improve citizens’ access to financial services. The CEO of Strike, a digital finance company that helped with the logistics of the new law, told CNN that over 70 percent of the country’s ‘active population’ do not currently have a bank account.”

    But there are fears that the adoption of such a historically volatile currency could harm Salvadorans, and risk economic stability. Bitcoin hit a historic high of over $60,000 in April, before losing nearly half its value in a crash later in the summer.” Jon Porter reports.

  5. “India is moving again,” Ola CEO Says As Value Rises

    Business Standard (India)

    “The gross merchandise value ( GMV) of SoftBank-backed ride-hailing company Ola crossed the pre-pandemic levels in the week to August 31, said Ola chief executive officer (CEO) Bhavish Aggarwal on Tuesday. He said the recovery from the second wave of Covid-19 infections has been three times faster as compared with the first wave last year.”

    ‘India is moving again. Our  cabs GMV crossed pre-covid levels last week. Recovery from the second wave is 3 times faster. Clearly, India is up and about,’ Aggarwal, the founder of the IPO-bound firm tweeted.

    Aggarwal said the 10 million people used Ola for the first time ever in FY21. He said as people move, they want to feel safe so they’re switching to personal or shared mobility instead of public transport. ‘Many are moving to autos taking our auto business to almost 150 per cent of pre-covid levels,’ said Aggarwal.”

    “He said the company is ensuring Ola rides are safe. Over 3 lakh drivers on Ola are vaccinated and it will have 100 per cent of them vaccinated soon. ‘We’re onboarding more driver-partners, entering new cities and building new products to better serve all your mobility needs post covid.” Business Standard reports.


What We’re Also Reading…

We are reading fellow Substacker Amaia’s Emerging Markets Explorer.

“It seems like these days, every hour the Chinese government is issuing a new regulation towards the crackdown of their Big Tech. One wonders what comes next, and investors and companies are shaking. But there is a way for making sense of this, and figuring out what comes next: which is knowing what the priorities for the CCP are. They are pursuing stability under four pillars.” Emerging Markets Explorer writes.