Emerging Markets Monitor - August 3
Pelosi's Taiwan Visit and China-US Tensions, Pakistan Rupee Surges, Hot MENA IPO Season, Ukraine Grain Ships On the Move, India's 5G Battle Lines Drawn
The Top 5 Stories Shaping Emerging Markets from Global Media - August 3
As Pelosi Leaves Taiwan, China’s Military Looms Larger
Wall Street Journal
“U.S. House Speaker Nancy Pelosi departed Taiwan after a whirlwind trip that raised military tensions over the island to their highest level in more than two decades, an escalation that is set to persist long after she returns home.”
“By the time Mrs. Pelosi (D., Calif.) wrapped up a day of meetings with Taiwan’s president, senior lawmakers, executives and human-rights activists and left Taiwan on Wednesday, China’s navy had already maneuvered into position for large live-fire drills that will encircle the island beginning Thursday.”
“Mrs. Pelosi’s visit sought to reinforce what she said was America’s ironclad commitment to preserving Taiwan’s democracy. Yet the trip also brings Beijing’s military activity into what Taipei claims as its territorial waters, according to Taipei’s Defense Ministry, raising the prospect of greater pressure on an island that is the most sensitive flashpoint in U.S.-China relations.”
“‘The proximity of the exercises to Taiwan could become the new norm,’ said J. Michael Cole, a Taipei-based senior adviser with the International Republican Institute, a nonprofit whose board includes Republican Party heavyweights. He described it as ‘salami-slicing’ that aims to constrain the spaces where Taiwan can operate. WSJ reports.”
Pakistan Rupee, Bonds Surge on Export Payment and IMF Optimism
Bloomberg
“Pakistan’s currency rose by the most in more than five years and its dollar-denominated bonds surged on higher export-related payments and optimism the beleaguered country is inching toward securing a bailout from the International Monetary Fund.”
“The rupee rose 4% to close at 228.8 on Wednesday, according to central bank data compiled by Bloomberg. Pakistan’s dollar bonds also jumped, with the notes due in December up 2.6 cents and quoted at 90.5 cents, the biggest advance since they were issued in 2017, according to indicative pricing compiled by Bloomberg.”
“The nation’s assets got a boost after data on Tuesday showed the trade deficit shrank by almost half to $2.6 million in July as import curbs reduced dollar demand. In addition, Pakistan has completed all tasks required before the IMF’s loan review, the fund’s country representative, Esther Perez Ruiz, said in a statement on August 2. That bolstered optimism the country may be able to avert a default.”
“The currency had tumbled about 15% in July, the biggest monthly slide since Bloomberg started compiling data in 1989. The central bank and finance ministry said in a rare joint statement released near midnight on July 31 that the rupee’s decline was temporary but is expected to appreciate in line with fundamentals over the next few months.” Bloomberg reports.
24 MENA IPOs Raise $13.5 Billion in First Half of 2022
Khaleej Times
“The initial public offering (IPO) activity in the Middle East and North Africa staged a strong rebound as the region witnessed a 500 per cent year-on-year increase in the number of companies listing during the first half of 2022 with 24 IPOs raising proceeds of $13.5 billion, reflecting a year-on-year increase of 2,952 per cent.”
“During the second quarter of 2022, Mena IPO markets saw nine IPOs raise approximately $9 billion in proceeds. Although, the number of IPOs decreased by 40 per cent when compared with first quarter of 2022, the proceeds raised increased by 133 per cent, according to the latest EY Mena IPO Eye report.”
“…In the UAE, the Dubai Electricity and Water Authority (Dewa) raised over $6 billion, becoming the biggest IPO in EMEA since 2019 and the largest IPO to date in the UAE. The order book was oversubscribed by 37 times. Borouge, the second-largest IPO during H1 2022, raised $2 billion with an aggregate oversubscription of almost 42 times. TECOM Group raised US$454 million and saw an oversubscription level of more than 21 times.” Khaleej Times reports.
Ukraine’s First Grain Ship Cleared to Leave Black Sea
Financial Times
”The first grain ship to set sail from Ukraine in months was cleared to embark on the final leg of its journey after passing an inspection by a team of international monitors in Turkish waters.”
“The Sierra Leone-flagged Razoni, carrying 26,000 tonnes of Ukrainian corn, set sail from the northern entrance of Turkey’s Bosphorus strait on Wednesday and headed for the Lebanese port of Tripoli.”
“Prior to its departure, the bulk carrier underwent an inspection by representatives from Russia, Ukraine, Turkey and the UN under the terms of a deal struck by Moscow and Kyiv aimed at easing a global food crisis.”
“…Razoni left the Black Sea Port of Odesa on Monday morning after weeks of negotiations that culminated in an agreement with Russia promising not to attack grain ships in exchange for a UN commitment that it would work to unblock the export of Russian food and fertiliser to global markets. After a journey that lasted almost 36 hours and involved navigating mine-laden waters, the vessel arrived safely at the northern entrance to the Bosphorus near Istanbul on Tuesday night.” The FT reports.
Battle for 5G Heats Up in India
The National
“The race to introduce fifth-generation (5G) telecoms services is heating up in India, as Asia's third-largest economy auctions its airwaves to offer the latest technology to its more than 1.3 billion inhabitants.”
“Fifth-generation technology, which can be 10 times faster than 4G, is expected to boost India's digital sector. Bidding for 5G is heating up between Indian telecom operators with deep pockets. There is a lot at stake, and the size of investment needed to develop more infrastructure for the service to take-off is huge.”
“The auction started on July 26. The process has attracted 149.85 billion Indian rupees ($18.9bn) of bids so far, the government said on Saturday. Reliance Industries' Jio, the telecom company of the conglomerate controlled by India's richest man, Mukesh Ambani, is leading the way.”
“Competitors Bharti Airtel and Vodafone Idea are bidding, too, while billionaire Gautam Adani's Adani Enterprises has also thrown its hat in the ring. The introduction of 5G is part of the push by Prime Minister Narendra Modi's government to accelerate growth in India's digital sector. New Delhi, under its Digital India campaign banner, expects the value of the sector to reach $1 trillion by 2025.” Rebecca Bundhun reports.
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