Emerging Markets Monitor - August 11
Dead Heat in Kenya Election, Russia Oil and Sanctions, The Fate of HSBC, Saudi Fund Invests in Egypt, Samsung Adds $3.3B Investment in Vietnam
The Top 5 Stories Shaping Emerging Markets from Global Media - August 11
Dead Heat in Kenya Presidential Election As Results Trickle In
Reuters
“Two days after Kenya's general election, officials had yet to announce who is leading the presidential race in East Africa's regional powerhouse, as confused citizens struggled to make sense of divergent tallies from the media in a nail-bitingly close race.”
“Media houses are tallying results from images of forms that the election commission uploaded from more than 46,229 polling stations, a mammoth task that means their tallies lag far behind the amount of raw data available.”
“Results are being watched carefully: Kenya is the region's richest economy, a stable nation in a volatile region and a close Western ally that hosts regional headquarters for Alphabet, Visa and other international groups.”
“Veteran opposition leader and former political prisoner Raila Odinga, 77, is making his fifth stab at the presidency. He is neck and neck with Deputy President William Ruto, 55.” Reuters reports.
Western Sanctions Have Had ‘Limited Impact’ on Russia Oil Output, IEA Says
Financial Times
“Western sanctions have had ‘limited impact’ on Russian oil output since the start of the war in Ukraine, the International Energy Agency said on Thursday, as it raised its forecast for Russian crude production into 2023.”
“Moscow’s exports of crude and oil products to Europe, the US, Japan and Korea had fallen by nearly 2.2mn barrels a day since its full-scale invasion of Ukraine, the Paris-based group said.”
“But the rerouting of flows to countries including India, China and Turkey had mitigated financial losses for the Kremlin. Russian oil production in July was only 310,000 b/d below prewar levels, a fall of less than 3 per cent, while total oil exports were down about 580,000 b/d, according to the IEA’s latest monthly oil report.”
“As a result, Russia would have generated $19bn in oil export revenues last month, and $21bn in June, the IEA’s data showed. ‘Asian buyers have stepped in to take advantage of cheap crude,’ the IEA said, with China having overtaken the EU as the biggest importer of Russian crude in June.”
“Increased demand for Russian crude compared with earlier in the year also meant that the discounts being paid for Russian cargoes had narrowed, it said. Although an EU embargo on Russian crude and products — due to come into full effect in February 2023 — would result in further declines in European imports, ‘some policymakers have suggested a possible softening of measures’, it added.” The FT reports.
Ping An Rejects HSBC’s Defense Against Spinoff
Bloomberg
“Ping An Insurance Group Co. isn’t convinced by HSBC Holdings Plc’s case against a proposed spinoff of its Asia operations, arguing the lender is in need of urgent and radical change, according to a person familiar with its views.”
“The insurer estimates a spinoff would generate additional market value of $25 billion to $35 billion, release $8 billion in capital requirements, and save on headquarter and infrastructure costs, the person said. It believes that HSBC has only emphasized the downsides and challenges of spinning off the business.”
“The Chinese firm’s position underlines the continuing gulf between HSBC and its largest shareholder. It indicates that Ping An is unlikely to relent in its campaign for change, heralding months more uncertainty and turmoil for Europe’s largest lender.”
“Ping An also argues that as HSBC Holdings Plc will remain a major shareholder of HSBC Asia, both parties will continue to benefit from a global network, the person said. The insurer’s view is that the cross-border wholesale banking revenues that HSBC says are at risk from any split includes significant intra-Asia business, which wouldn’t be affected by a spin off.”
“Many of its calculations have already appeared in a June 8 report by In Toto Consulting Ltd., which said the analysis was commissioned by “an independent third party.” Other analysts have generally questioned the benefits of a split, citing issues like the likely complexity and costs involved.” Bloomberg reports.
For more on this story, check out our column: How the Fate of HSBC Reflects the Future of Globalization
Saudi Investment Fund Acquires Stakes in Four Egyptian Companies
Asharq Al-Awsat
“The Saudi Egyptian Investment Company (SEIC), owned by Saudi Arabia's state-owned Public Investment Fund (PIF), has bought minority stakes in four Egyptian companies for $1.3 billion, Egypt's planning ministry said on Wednesday.”
“The companies are Abu Qir Fertizilers and Chemical Industries, Misr Fertilizers Production Company, Alexandria Container and Cargo Handling, and payments firm E-Finance for Financial and Digital Investments.”
“The PIF congratulated in a tweet the SEIC on acquiring stakes in four major Egyptian companies. Last week PIF set up SEIC with the stated aim of investing in Egypt's ‘promising economic sectors,’ being one of the key strategic economic markets in Africa.”
“The Saudi sovereign wealth fund is building an international portfolio of investments while also investing locally in projects to help reduce the Kingdom's economic reliance on oil. It has approximately $620 billion of assets under management.” Asharq Al-Awsat reports.
Samsung to Invest Additional $3.3 Billion in Vietnam
South China Morning Post
“Samsung Electronics plans to make an additional US$3.3 billion investment in Vietnam this year, enabling the South Korean technology giant to start producing semiconductor components in the Southeast Asian country by July 2023.”
“That investment and various business initiatives were discussed by Samsung president Roh Tae-moon, head of the company’s MX business for mobile devices, in a meeting last Friday with Vietnamese Prime Minister Phạm Minh Chính, according to a report by local newspaper Lao Dong.”
“Samsung, the world’s largest memory chip maker, is preparing trial production of its flip-chip ball grid array, a surface-mount packaging technology used for integrated circuits, at the Samsung Electro-Mechanics facility in Thái Nguyên province, in the northeast region of Vietnam. Samsung also plans to establish a new research and development centre in the Vietnamese capital of Hanoi at the end of this year or in early 2023.”
“The latest initiatives in Vietnam reflect Samsung’s increased effort to diversify its manufacturing supply chain, even as China remains concerned over South Korea potentially joining the United States-initiated Chip 4 Alliance.” SCMP reports.
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