Emerging Markets Monitor - August 19
MidEast States In $1.3 Trillion Windfall, Copper to Recover in Mid 2020s, Pakistan New CB Head, Thai Conglomerate Buys Selfridge's, Alibaba vs Meituan Food War
The Top 5 Stories Shaping Emerging Markets from Global Media - August 19
Energy-Rich Middle East States Set for $1.3 Trillion Windfall, IMF Says
Financial Times
“Energy-rich Middle East states are set to reap up to $1.3tn in additional oil revenues over the next four years, according to the IMF, as they enjoy a windfall that will bolster the firepower of the region’s sovereign wealth funds at a time when global asset prices have sold off.”
“…Jihad Azour, IMF director for the Middle East and north Africa, told the Financial Times that relative to expectations before the war in Ukraine, the region’s oil and gas exporters, particularly Gulf states, ‘will see additional cumulative oil revenues of $1.3tn through 2026’.”
“The Gulf is home to some of the world’s biggest oil and gas exporters, and several of its largest and most active SWFs. These include Saudi Arabia’s Public Investment Fund, the Qatar Investment Authority, Abu Dhabi’s stable of vehicles, including the Abu Dhabi Investment Authority, Mubadala and ADQ, and the Kuwait Investment Authority.”
“The $620bn PIF, which is chaired by Saudi Crown Prince Mohammed bin Salman, invested more than $7.5bn in US stocks in the second quarter, including in Amazon, PayPal and BlackRock, as it sought to take advantage of falling stock prices, according to market filings.”
“Gulf SWFs were similarly active during the pandemic as they looked to capitalise on the market volatility triggered by the Covid-19 crisis. During the global financial crisis in 2009, they took advantage of the turmoil to snap up stakes in distressed western companies.”
“In recent years, many of the funds have been focusing on sectors such as technology, healthcare, life sciences and clean energy as governments pursue returns on investments, but also seek to diversify economies and develop new industries.”
“…The IMF forecasts that economic growth in the Gulf Cooperation Council, which includes Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Qatar and Oman, will accelerate from 2.7 per cent in 2021 to 6.4 per cent this year.” The FT reports.
BHP Sees Copper Market “Take Off” by Mid 2020s
Mining.com
“After falling to 20-month lows in July, copper fought its way back to the $8,000 a tonne last week on hopes the worst of the slowdown in China was over. But now the bellwether metal is flirting with a bear market again — with a nearly 20% decline so far in 2022.”
“…However, from the mid-to-late 2020s prospects are significantly better according to Huw McKay, Vice President, Market Analysis & Economics. That is due to what BHP calls the electrification mega-trend: ‘A take–off of demand from copper–intensive easier–to–abate sectors (renewable power generation, the electrification of light duty transport, and the infrastructure that supports them both) is expected to be a key feature of industry dynamics from the second half of the 2020s forward: if not earlier.’”
“‘Rapid growth in renewable power generation and EVs in China are already making a material contribution to growth, at the margin.’”
Pakistan Names Former Deputy as CB Head to Aid Ailing Economy
Bloomberg
“Pakistan appointed a former central banker to head the monetary authority as the nation contends with one of Asia’s fastest inflation rates and faltering foreign-currency reserves.”
“Jameel Ahmad, a former deputy governor will now head the State Bank of Pakistan for a term of five years, according to a statement of the finance ministry. He will replace Murtaza Syed, who was the interim chief since early May.”
“Ahmad takes on the role against the backdrop of a precarious political setting and funding uncertainties. The new governor faces the task of reining in the fastest inflation in 14 years due to soaring energy costs while shoring up foreign-exchange reserves that have fallen below $8 billion, a level that covers less than two months worth of imports.”
“The central bank, which has already raised interest rates by 525 basis points this year, meets again on Aug. 22 where six of nine economists in a Bloomberg survey as of Friday expect the policy rate to be kept at 15%.” Bloomberg reports.
Thai Retail Conglomerate Buys UK’s Selfridge’s Group
Inside Retail Asia
“Thai retail conglomerate Central Group and Signa Holding have completed their acquisition of UK department store chain Selfridges Group from the billionaire Weston Family.”
“The US$5.37 billion deal, disclosed last year, will see Selfridges Group join Central and Signa’s existing portfolio of 22 luxury department stores and two new stores to open in Dusseldorf and Vienna. Selfridges Group has 18 stores under four banners in three countries.”
“Current MD of The Selfridges Group, Anne Pitcher, will resign from her role at the end of the year following the deal’s closure. CEO of Central and Signa’s luxury department store group in Europe, Stefano Della Valle, will lead Selfridges Group under his expanded role.” Inside Retail Asia reports.
Alibaba to Challenge Meituan in Booming China Food Delivery Market
South China Morning Post
“Ele.me, the food delivery platform backed by Alibaba Group Holding, announced on Friday a partnership with ByteDance that would allow the 600 million daily active users on Douyin, TikTok’s Chinese version, to order meals through the short video app.”
“Through the collaboration, Ele.me will promote offerings from millions of restaurants and shops through videos on Douyin, according to the companies’ joint press release. Viewers can immediately place their orders via a mini-app of Ele.me found on Douyin, in an experience that the firms called ‘I watch, I order and I receive’.”
“Alibaba, owner of the South China Morning Post, bought Ele.me from the app’s founding team in 2018 for US$9.5 billion. However, the platform has been struggling to compete against leading player Meituan, which is backed by Tencent Holdings.”
“Ele.me held 27 per cent of China’s online food delivery market in the first quarter of 2021, less than half of Meituan’s share of 67 per cent, according to Shenzhen-based Forward Industry Research Institute.” SCMP reports.
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