Emerging Markets Daily - September 14
Argentina Peronists Lose Mid-Terms, Mobius vs. Soros on China Investment, OPEC Sees Oil Demand Rising, Iran Nuclear Talks, India Seen as Rising FDI Destination
The Top 5 Emerging Markets Stories - September 14
Signal Watch: Argentina Ruling Peronists Suffer Heavy Defeat in Mid-Term Elections
“President Alberto Fernández’s leftist Peronist party has suffered a heavy defeat in Argentina’s midterm primaries, a result that pointed to the government’s senate majority being at risk in November’s elections.”
“The centre-right opposition coalition Juntos (Together) recorded the biggest win since it was formed in 2015, taking 41 per cent of the nationwide vote compared with the government’s 30 per cent, with 96 per cent of votes counted.”
“Voting is supposed to be compulsory in Argentina’s primary elections, so the ballot to choose party candidates acts as a nationwide opinion poll for the midterms in two months’ time, when half the lower house of congress and one-third of the senate will be renewed…”
“The Peronists inherited an economic crisis from Macri but during their two years in power, poverty has continued to rise, annual inflation is now running at more than 50 per cent and there have been more than 100,000 Covid-related deaths.”
“A much-mooted deal with the IMF to reschedule $44bn of debt has still not materialised and projected growth this year of 6.4 per cent will not make up all the ground lost last year, when the economy crashed 10 per cent.” Ignacio Portes reports.
Mobius Hits Back at Soros on His China Investment Warnings
“Emerging markets guru Mark Mobius has hit back at George Soros after the billionaire investor called a recent push into China by US asset manager BlackRock a ‘tragic mistake’.”
“Soros made the explosive claim in an opinion piece titled BlackRock’s China Blunder in the Wall Street Journal on 6 September. The 91-year-old wrote that the entry into China was ‘likely to lose money for BlackRock’s clients’ and ‘damage the national security interest of the US and other democracies’.”
“Mobius, 85, disagreed. He doesn’t work for BlackRock but has plenty of experience in China from a career spanning more than three decades.”
“‘I certainly appreciate Soros’ concern for democracy and freedom, but I feel an approach of disengagement is not the most effective path,’ Mobius said. He added: “Commerce and investment are key areas where people globally can engage with each other regardless of political or religious beliefs. We can’t hope to impose our own beliefs on others while at the same time not being forced to adopt beliefs which we reject.’”
“BlackRock, the world’s largest money manager overseeing more than $9tn, became the first foreign-owned firm to win approval to operate a wholly owned business in China. Its first mutual fund in China, launched at the end of August, has raised over $1bn from more than 100,000 Chinese investors.”
“Asset managers consider China to be a booming market, with other foreign firms including Schroders and Fidelity International looking to set up similar operations to BlackRock...”
“Mobius, who spent more than 30 years at Franklin Templeton before setting up Mobius Capital Partners in 2018, remains bullish on China despite a regulatory crackdown on certain technology companies and those involved in education, gaming and food delivery.” TodayUK News reports.
OPEC Sees Oil Demand Rising, To Hit Pre-Covid Levels Next Year
“Opec expects oil demand for 2022 to exceed pre-pandemic levels, reaching 100.8 million barrels per day as the crude exporting group sees strong economic recovery on the back of widespread inoculation efforts.”
“‘Ongoing improvements in vaccination rates and a potential increase in public confidence in managing Covid-19 is anticipated to be more widespread in 2022, further supporting the recovery of oil demand,’ particularly transport fuels, Opec said in its latest monthly market report.”
“The group also revised upwards its estimated demand growth for 2022, up by 900,000 bpd to 4.2 million bpd amid expectations of higher levels of economic activity and fewer movement restrictions…”
“The group left overall demand growth in 2021 unchanged at 6 million bpd. Global consumption this year is expected to hit 96.7 million bpd. ‘An upwards revision due to positive mobility indicators for OECD [Organisation for Economic Co-operation and Development] countries in 3Q21 was offset by a downwards revision to 4Q21, given the risk to oil demand fundamentals stemming from the increase in Covid-19 cases, primarily related to the Delta variant,’ the report said.” Jennifer Gnana reports.
Geopolitics: Iran Intends to Resume Nuclear Talks in Near Future
Wall Street Journal
“Iran said Monday it planned to resume nuclear talks in the near future, the clearest indication yet that negotiations on reviving the 2015 nuclear deal could soon resume, and the Biden administration confirmed it would drop a resolution censuring Iran for failing to cooperate with nuclear inspectors.”
“The comments came after Iran agreed over the weekend to allow International Atomic Energy Agency staff access and reset cameras and other equipment that monitor Iranian activities at various nuclear-related sites in Iran.”
“Iran’s new president, Ebrahim Raisi, had warned that if the U.S. and European powers sought to rebuke Iran at the meeting of IAEA member states, it could derail Tehran’s plan to resume the nuclear talks.”
“The State Department said Monday that if Iran implements its weekend agreement with the IAEA, the U.S. will drop discussions of a resolution rebuking Tehran at the IAEA board meeting, which started Monday.” Laurence Norman and Aresu Eqbali report.
India Perceived as Attractive FDI Investment Destination, Study Says
“India is an attractive investment destination for developed economies as 44% of 1,200 global business leaders based in the US, UK, Japan, and Singapore plan to make additional or first-time investments in the country, but more business leaders, especially in Japan, find India lucrative for its domestic market rather than as a hub for exports, according to a survey by consulting firm Deloitte Touche Tohmatsu India LLP.”
“Despite economic disruption due to the Covid-19 pandemic, inflow of foreign direct investment (FDI) in India amounted to a record $81.72 billion, 10% higher than the previous fiscal year, and this trend would continue, it said in the report, ‘India’s FDI opportunity’.”
“India has the strongest positive perception in the US when compared to markets such as China, Brazil, Mexico, and Vietnam. ‘Given US and UK’s strong historic ties with India, US and UK business leaders expressed greater confidence in India’s stability. However, respondents from Japan and Singapore currently view Vietnam as their preferred investment destination,’ the report said.”
“‘Significantly, among first time investors [44% of 1,200 respondents], nearly two-thirds are planning investments in India within the next two years,’ it said. A 57% of them find energy infrastructure most likely to see new investments, reflecting India’s plans to significantly grow its renewables capacity, followed by financial services (49%) and healthcare (48%) sectors, according to the survey.” Hindustan Times reports.
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