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Emerging Markets Daily - September 10
Biden Calls Xi To Mend Ties, Lebanon Gets New Gov't, China and LatAm Stocks Rally on Biden-Xi Call, Libya Oil at Risk, Guinea Coup Aftermath
The Top 5 Stories Shaping Emerging Markets - September 10
Biden Calls Xi in Bid to Reset Strained US-China Relations
“Joe Biden has held his second call with Chinese leader Xi Jinping since becoming president in an effort to break an impasse in the Sino-US relationship after previous top-level meetings produced little progress.”
“The White House said the two leaders had a ‘broad, strategic discussion’ and that Biden had ‘underscored the United States’ enduring interest in peace, stability and prosperity in the Indo-Pacific and the world’.”
“The pair also discussed the ‘responsibility of both nations to ensure competition does not veer into conflict’ during the call. China’s foreign ministry said the talks were candid, and quoted Xi as saying that US policies towards Beijing were responsible for ‘serious difficulties’ in relations.”
“It was the first time the two presidents have spoken since February. Biden requested the call after the White House concluded that Chinese officials who met their US counterparts this year were ‘unwilling to engage in serious or substantive conversations’, according to a senior US official.” The FT reports.
Lebanon Gets New Government After 13 Month Deadlock
Wall Street Journal
“Lebanon’s political factions agreed Friday on a new government led by former Prime Minister Najib Mikati, ending a more than yearlong deadlock as the country struggles with an economic collapse that has pushed millions into poverty.”
“President Michel Aoun and Mr. Mikati signed a decree leading to the formation of a new cabinet, according to the state-run National News Agency. Mr. Mikati, a billionaire businessman, was nominated as Prime Minister in July after two previous attempts were abandoned. Lebanon has been run by a caretaker government with little power since shortly after the deadly Beirut explosion in August last year.”
“‘I hope that we will rise to the occasion with this government and stop the current collapse,’" Mr. Mikati said during a news conference at the presidential palace.” Nazih Osseiran reports.
Hong Kong and China Tech Stocks Rally After Biden-Xi Call; So Do Latin America Markets
South China Morning Post and Reuters
“Hong Kong stocks advanced as tech companies rebounded, leading the market to a three-week rally. Stocks in mainland China reached the highest level in six years as President Xi Jinping and President Joe Biden spoke on Friday amid frayed ties.”
“The Hang Seng Index rose 1.9 per cent to 26,205.91, taking the three-week rally to 5.5 per cent. The Shanghai Composite Index added 0.3 per cent to 3,703.11, reaching a level not seen since August 2015.”
“The Hang Seng Tech Index rose 2.9 per cent, clawing back more than half of the decline on Thursday, as online game developers rebounded from deep losses on Thursday. Meituan and Alibaba Group Holding, the owner of this newspaper, added 4.3 per cent.”
“Tencent Holdings, the largest online game developer in China, jumped 2.1 per cent, recovering part of the 8.5 per cent slump on Thursday as the firm spent HK$103 million buying back shares on Thursday. NetEase jumped 3.1 per cent. Xiaomi increased 2.1 per cent after spending HK$98.2 million on stock buyback. SCMP" reports.
“Meanwhile, Reuters reports: “Most Latin American currencies and stocks firmed on Friday in line with global markets on signs that the United States and China are attempting to repair frayed ties, while Peru's sol hit an over two-week high following an interest rate rise overnight.”
Libya Oil Output At Risk Amid Power Struggle
“Libya’s oil production is in danger of slumping again, as a political power struggle threatens to end a period of relative stability.
“The standoff comes at an unfortunate time for the North African country, potentially depriving it of substantial revenue as crude trades above $70 a barrel. It could also prove tricky for the global oil market, shutting some Libyan production right after Hurricane Ida halted a record amount of U.S. output.”
“It all started in March, when the government in Tripoli set out to restore the Ministry of Oil. The department had been weak for several years, with Oil Minister Mohamed Oun having little influence over the country’s industry.”
“Instead, Libya’s large production and export facilities had been controlled by Mustafa Sanalla, chairman of the National Oil Corp. He had effectively run the energy sector, signed agreements with international oil companies and represented Libya at meetings of the Organization of Petroleum Exporting Countries.” Salma El Wardany reports.
The Guinea Coup Aftermath: Aluminum Markets and Leaders Whipsawed
“A military coup in Guinea that ousted the country’s president has sent shockwaves through global bauxite markets and ended the country’s period of political stability, analysts say.”
“The coup leaders placed President Alpha Condé under house arrest and removed all public officials from office, alleging economic mismanagement, corruption and human rights violations.”
“The coup’s leader, Mamady Doumbouya, a former officer in the French Foreign Legion, has promised a transitional government of national unity and a ‘new era for governance and economic development’.”
“In the immediate aftermath of the coup, land and air borders closed, raising fears of disruptions to the global supply of bauxite, the main ore source of aluminium, for which Guinea supplies 20% of the global market.”
“But the new transitional government, led by military junta the National Committee for Reorientation and Development, (CNRD) moved swiftly to reopen sea borders and ports, ensuring bulk mineral exports continued, and encouraged miners to resume operations.”
“This helped offset the risk of supply disruptions, says Eric Humphery-Smith, Africa analyst at risk intelligence company Verisk Maplecroft.” Shoshana Kedem reports.