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Emerging Markets Daily - September 13
The Future of the Pandemic, Tech Crackdown Bites S. Korea Inc., Beijing to Break Up Alipay, Shopee Storms Across Lat-Am, Jack Daniels Maker Sees India Growth
The Top 5 Emerging Markets Stories - September 13
Here’s What the Next Six Months of the Pandemic Will Bring
“For anyone hoping to see light at the end of the Covid-19 tunnel over the next three to six months, scientists have some bad news: Brace for more of what we’ve already been through.”
“Outbreaks will close schools and cancel classes. Vaccinated nursing home residents will face renewed fears of infection. Workers will weigh the danger of returning to the office as hospitals are overwhelmed, once again.”
“Almost everyone will be either infected or vaccinated before the pandemic ends, experts agree. Maybe both. An unlucky few will contract the virus more than once. The race between the waves of transmission that lead to new variants and the battle to get the globe inoculated won’t be over until the coronavirus has touched all of us.”
“‘I see these continued surges occurring throughout the world,’ said Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota in Minneapolis, and an adviser to U.S. President Joe Biden. ‘Then it will drop, potentially somewhat precipitously,’ he said. ‘And then I think we very easily could see another surge in the fall and winter’ of this year, he added.”
“With billions of people around the world yet to be vaccinated and little chance now of eliminating the virus, we can expect more outbreaks in classrooms, on public transport and in workplaces over the coming months, as economies push ahead with reopening.”
“Even as immunization rates rise, there will always be people who are vulnerable to the virus: Newborn babies, people who can’t or won’t get inoculated, and those who get vaccinated but suffer breakthrough infections as their protection levels ebb.” Michelle Fay Cortez reports.
Tech Crackdown Bites Korea, Inc.
Wall Street Journal
“Investors are selling technology stocks in a major Asian economy on regulatory worries just as one of the country’s biggest online payment companies is about to go public. China? No, it’s South Korea.”
“Shares of South Korean internet companies took a hit last week after the country’s financial regulators said fintech platforms selling products like insurance or funds aren’t mere advertisers, but have to get financial licenses, too.”
“Shares of Kakao, which owns South Korea’s largest messaging app, are down 20% since last Monday. KakaoBank iis down 17%. The mobile-only bank went public last month and has become the country’s most valuable listed financial company. Kakao’s payment unit Kakao Pay is planning an initial public offering in October. Shares of Naver, another internet giant, have dropped 10% over the same period.”
“Foreign investors were quick to run for the exits. They net sold around $1 billion worth of South Korean shares last week, according to Goldman Sachs. They are probably haunted by the specter of a crackdown similar to the one happening in China. Shares of Chinese e-commerce giant Alibaba have nearly halved from their peak last year, for example.”
Beijing to Break Up Ant’s Alipay As Tech Crackdown Continues
”Beijing wants to break up Alipay, the 1bn plus-user superapp owned by Jack Ma’s Ant Group, and create a separate app for the company’s highly profitable loans business, in the most visible restructuring yet of the fintech giant.”
“Chinese regulators have already ordered Ant to separate the back end of its two lending businesses, Huabei, which is similar to a traditional credit card, and Jiebei, which makes small unsecured loans, from the rest of its financial offerings and bring in outside shareholders.”
“Now officials want the two businesses to be split into an independent app as well. The plan will also see Ant turn over the user data that underpins its lending decisions to a new credit scoring joint-venture which will be partly state-owned, according to two people familiar with the process. ‘The government believes big tech’s monopoly power comes from their control of data,’ said one person close to financial regulators in Beijing. ‘It wants to end that.’”
“The move may slow down Ant’s lending business, with the enormous growth of Huabei and Jiebei partly powering its planned IPO last year. The CreditTech unit, which includes the two units, overtook Ant’s main payment processing business for the first time in the first half of 2020, to account for 39 per cent of the group’s revenues.” Sun Yu and Ryan McMorrow report.
Singapore e-tailer Shopee Storms Across Latin America
Nikkei Asian Review
“Social media feeds in Brazil were deluged Thursday with ads trumpeting huge discounts on the Shopee e-commerce platform: 65% off Adidas sneakers, 49% off wireless headphones, and more.”
“The promotions for Shopee's 9.9 Super Shopping Day sale, while new to South American consumers, are a familiar sight in Southeast Asia, where Shopee operator Sea has used such gambits to become the region's largest online retailer.”
“Now the Singapore-based company is pouring money into Central and South America, where the e-commerce market is wide open.”
“New York-listed Sea, which focuses on online retail, games and finance, was valued at $175 billion as of Friday, the highest market capitalization of any Southeast Asian business. The company said this week it is raising more than $6 billion through offerings of American depositary shares and bonds for its expansion effort.”
“Sea, which entered Brazil's e-retail market in late 2019, already led in downloads across Apple app store there in July, beating out the likes of WhatsApp and Instagram.” Nikkei Asia reports.
American Spirits Maker Sees “Huge Opportunity” in India
“American spirits major Brown-Forman, the maker of many popular brands including Jack Daniel’s, is seeking to tap a ‘huge opportunity’ in the Indian market where premiumisation of liquor has accelerated during the coronavirus pandemic, according to a company official.”
“The Louisville, Kentucky-based company has enhanced efforts towards making its premium global spirits portfolio accessible to drive category penetration for American Whiskeys, said a company official.”
“It is driving retail distribution for its premium and super-premium portfolio and expanding with introductions of the global portfolio in the Indian market.”
“‘As a part of our portfolio development strategy, we are looking to expand the Jack Family of Brands in India to strengthen our portfolio in India and serve consumers better by offering them more choices,’ Brown-Forman director and GM-IMENA Siddharth Wadia told PTI.” The Hindu and Press Trust of India report.