Emerging Markets Monitor - April 24
China SenseTime Soars 36%, IAEA's New Worries on Iran Nukes, Gold Rally Fueled by Chinese Buyers, KKR Makes Big Push in India, Ghana On Verge of Deal With Lenders
The Top Stories Shaping Emerging Markets from Global Media - April 24
China’s SenseTime Soars 36% After Unveiling a New AI Model
Bloomberg
“SenseTime Group Inc.’s stock soared its most in more than two years after releasing the latest version of its SenseNova generative AI model, highlighting the intense interest surrounding China’s efforts to develop artificial intelligence.”
“The shares gained as much as 36% after the company revealed SenseNova 5.0 during its Tech Day event in Shanghai. The ChatGPT-like platform has ‘significantly’ improved in terms of linguistic and creative capabilities, Chairman Xu Li said in a statement. Trading in the stock was suspended after the abrupt surge but will resume Thursday.”
“SenseTime is among a growing number of Chinese corporations and startups exploring ways to develop an answer to OpenAI’s ChatGPT. In 2023, it joined Baidu Inc. and Alibaba Group Holding Ltd. in developing its own inhouse generative AI platform. The potentially transformative technology has since become a key area in which Beijing is encouraging local companies to compete with their US counterparts.”
“The company said in a filing it was unaware of any reasons for the dramatic share price surge apart from SenseNova 5.0, which comes with about 600 billion parameters. ‘It achieved significant improvements in knowledge, mathematics, reasoning and coding capabilities, and its performance is generally comparable to GPT-4 Turbo,’ the company said in the filing.”
“SenseTime’s Wednesday rally may stem in part from a depressed valuation. The company, once celebrated as a leader in the Chinese AI arena, has shed more than 80% of its market value since a 2021 IPO, after the US sanctioned the firm much like it did Huawei Technologies Co. The abrupt death of a co-founder last year also rattled investors.”
“-There’s very little detail to warrant such a move other than the fact that expectations are very low and the stock is oversold,’ said Vey-Sern Ling, a managing director at Union Bancaire Privee.” Bloomberg reports.
IAEA May Hold “High Level” Talks in Iran as Nuclear Concerns Grow
The National
“The International Atomic Energy Agency (IAEA), the UN’s nuclear watchdog, is considering holding a high-level political discussion in Tehran within the next ‘couple of weeks’ as concerns grow about Iran’s nuclear programme, its director general has said.”
“Iran, which is currently in the middle of a stand-off with Israel – another nuclear nation – is ‘very close’ to possessing enough enriched uranium to produce several nuclear warheads, Rafael Grossi told The National on the sidelines of the World Energy Congress on Wednesday.”
“‘But that does not mean they have them now. One needs to be careful,’ Mr Grossi said…Iran has declared 21 sites to the agency and the organisation has also inspected suspected sites where uranium particles have been found – including particles of uranium enriched over 80 per cent – close to the level generally required for a nuclear weapon.”
“…Meanwhile, outside of Iran, development of a civil nuclear power industry is progressing in the Middle East, Mr Grossi said. Saudi Arabia is preparing bids for a number of nuclear power plants that it is planning to build.”
“The UAE, the first in the Arab region to open a nuclear power plant, plans to meet 25 per cent of its electricity requirements from nuclear energy once its Barakah plant becomes fully operational this year.”
It would have been ‘unthinkable’ a few years ago for nuclear reactors to be operating in the Emirates, Mr Grossi said, adding that he was confident about Saudi Arabia going ahead with its nuclear energy programme.” John Benny reports.
Gold’s Record-Setting Rally May Have its Roots in Chinese Frenzy
Mining.com/Bloomberg
“Gold’s record-setting rally this year has puzzled market watchers as bullion has roared higher despite headwinds that should have held it back. With prices sagging this week, the explanation may lie in China.”
“After weeks of debate about whether a mystery buyer was stoking the rally, several prominent figures in the global gold market are coming to the conclusion that the major new driving force is a legion of fleet-footed retail investors on the Shanghai Futures Exchange.”
“In a matter of weeks, the SHFE has gone from a sedate futures venue to a nexus of the global gold market. While rival centers such as London and New York have also seen activity rise, the fact that SHFE volumes have spiked from a low base offers a compelling sign that a newly arrived cohort of Chinese investors has helped drive prices sharply higher.”
“Gold has soared this year, topping $2,000 an ounce from early March in the face of major pressures that, in ordinary times, would have capped gains. Driven by fading expectations for a pivot to lower interest rates from the Federal Reserve, these included higher Treasury yields and a rallying US dollar. On top of that, there was a virtual buyers’ strike in India, the second-largest consumer, disinterest from western funds, and net sales by exchange-traded funds. Yet SHFE volumes started to spike, and prices powered higher.”
“‘The only thing that drives it in a Bitcoin-esque kind of way is massive speculative plays,’ according to Ross Norman, a former trader at Credit Suisse Group AG and Rothschilds & Sons., who now helms the Metals Daily journal.”
“…'It’s another sign of emerging markets, and particularly Chinese traders, wresting price discovery away from Western markets,’ said John Reade, chief market strategist at the World Gold Council. ‘We know from other commodity markets, that from time-to-time, Shanghai traders become the most dominant players. That’s never really been the case in gold, but I think now that this might have changed.’”
“Daniel Ghali, a senior commodity strategist at TD Securities, has also been on the hunt to identify gold’s mystery buyer, and he still thinks that the dominant force is likely to be a deep-pocketed buyer in the so-called official sector, which covers state-linked institutions such as central banks and sovereign wealth funds. But he says buying activity there has also been closely correlated with weakness in the yuan, and investors on SHFE may be acting with the same underlying motivations.” Mining.Com/Bloomberg report.
KKR Bets on Domestic Consumption, Private Credit in India Push
Bloomberg
“KKR & Co. says the consumer sector will continue to provide investment opportunities in India, where the US buyout giant is also building out its private credit portfolio.”
“The investment firm remains bullish on India’s domestic consumption story despite elevated valuations, according to Gaurav Trehan, head of Asia Private Equity and the chief executive officer of the India business. ‘It’s probably one of those sectors where valuations sustain and we believe this will continue to be a 15, 20, 25, 30-year story in India,’ Trehan said in an interview in Mumbai.”
“KKR joins a wave of global firms deploying billions of dollars in the world’s most-populous nation, attracted by the fastest-growing major economy and investment incentives offered by Prime Minister Narendra Modi. Blackstone Inc. aims to add an additional $25 billion of Indian private equity assets over the next five years, while Goldman Sachs Group Inc. plans to invest as much as $4 billion over the same period.”
“KKR has deployed about $11 billion in India over almost two decades, where it has invested in companies across healthcare, life sciences, technology services and consumer-focused sectors. Its co-founder Henry Kravis said earlier this year that the firm will deploy its next $10 billion in the country at a faster clip than before, according to local media reports.” Bloomberg reports.
Ghana Expects MOU with Bilateral Lenders by May
Reuters
“Ghana's Finance Minister expects a draft Memorandum of Understanding (MoU) from the country's bilateral creditors in May on a restructuring deal, he said.”
“The MoU, once signed, would cement a deal to restructure $5.4 billion of loans with its official creditors, including China and France, agreed in January.”
“The restructuring is a milestone in Ghana's quest for debt relief as it charts its way out of the worst economic crisis in a generation and should unlock further tranches of its $3 billion programme with the IMF.”
“Speaking on the sidelines of the IMF and World Bank Spring Meetings in Washington, Mohammed Amin Adam also said he was confident the International Monetary Fund's executive board will approve in June the review of its staff-level agreement.” Reuters reports.
“You can't cross the sea merely by standing and staring at the water.” - Rabindranath Tagore