Emerging Markets Monitor - Dec. 17
Argentina Exits Recession, China Growth Slows, Korean Battery Stocks Plunge, Ukraine Kills Russian General in Moscow, Dubai Stocks Sizzle - Led by Emaar
The Top Stories Shaping Emerging Markets - December 17
Argentina Economy Exits Recession in Milestone for Milei
Financial Times
”Argentina emerged from a severe recession in the third quarter, marking a milestone for libertarian president Javier Milei’s bid to end the country’s long-running economic crisis. GDP expanded 3.9 per cent from July to September in seasonal-adjusted terms compared with the previous quarter, marking Argentina’s first quarter of growth since it entered recession in late 2023, the country’s statistics agency said on Monday.”
“…The rebound comes as Milei marks one year in office, during which time he has unleashed brutal spending cuts and a fierce deregulation drive. The programme has brought down the country’s triple-digit annual inflation and made the libertarian one of the most prominent leaders of the global right, winning glowing endorsements from the likes of US President-elect Donald Trump and one of his closest advisers, billionaire Elon Musk.”
“Argentina’s sovereign bonds climbed on Monday, with the premium over US Treasuries that investors demand to hold its debt falling 4.4 per cent to 677 basis points, down from more than 2,000 when Milei took office.”
“…While JPMorgan said it expects Argentina’s economy to contract by 3 per cent this year, it is projecting 5.2 per cent growth in 2025….Analysts have warned that Milei must deliver lasting growth that begins to lift Argentines’ living standards if he wants to prevail at midterm elections in late 2025, where he will hope to expand his La Libertad Avanza’s tiny congressional minority.”
“Big challenges remain for his government, including lifting Argentina’s capital and currency controls, which are deterring foreign investment and preventing the central bank from building up its hard currency reserves.” Ciara Nugent reports.
China Growth Slows As U.S Trade Tensions Mount
Wall Street Journal
“A bundle of economic data from China suggest government efforts to boost the economy are struggling to gain traction, a sign that Beijing will need to do more next year to rev up growth as it confronts new trade tensions with President-elect Donald Trump.”
“Officials have in recent days telegraphed that more help is coming, with pledges to boost government borrowing, cut interest rates, and stabilize stock and property markets in an effort to revive lackluster consumer spending.”
“But without concrete details on how big the planned stimulus will be, and how exactly Beijing intends to juice consumption, many economists expect growth in China to slow next year, especially if Trump follows through with his threat to impose steep new tariffs on Chinese imports into the U.S.”
“Retail sales growth in China slowed unexpectedly sharply in November, rising just 3% year over year compared with October’s 4.8% gain, according to figures published Monday by China’s National Bureau of Statistics. The slowdown wasn’t so bad after accounting for steep discounts in October ahead of a November shopping festival, but the figure represents only a small increase on average rate of annual sales growth recorded in the third quarter.” Jason Douglas reports.
Korean EV Battery Stocks Plunge on Fears of US Tariffs
Korea Times
“The stock prices of Korean producers of cathode materials and copper foil plummeted Tuesday, following reports of U.S. President-elect Donald Trump’s transition team seeking to impose tariffs on all battery materials globally and then negotiating individual exemptions with allies.”
“Investors dumped their shares in Korean electric vehicle (EV) battery firms, amid growing fears about the possibility that those companies could bear heavier costs to avoid U.S. tariffs.”
“On Monday, Reuters reported that it obtained the transition team’s documents recommending the introduction of tariffs on ‘EV supply chain’ imports including batteries, critical minerals and charging components.”
“The news agency added that the incoming administration was also advised to use Section 232 tariffs, which target national security threats, to limit imports of such products.”
“Although the plans are interpreted as measures to curb the growth of China’s EV and battery sectors, Korean companies are already being affected by Trump’s protectionist trade policies. For example, POSCO Future M’s stock price plunged 8.24 percent during Tuesday’s trading session, as investors expect the next U.S. president to urge the Korean firm to produce its battery materials on U.S. soil and reduce the use of low-priced minerals from China.”
“Stock prices of EcoPro BM, L&F and LG Chem, all of which produce cathode materials, also fell 7.8 percent, 4.2 percent and 4.1 percent, respectively. Lotte Energy Materials, a copper foil maker, experienced a 5.47 percent drop in its stock price.”
“The stock prices of Samsung SDI and LG Energy Solution, two of Korea’s listed EV battery manufacturers, went down by 6.08 percent and 3.89 percent, respectively.”
“…Battery materials industry officials said that they have been paying close attention to the transition team’s next step, as it remains uncertain as to how the Trump administration will negotiate with allies about the tariff issue.”
“…According to the KITA, the volume of Korea’s cathode materials exports to the United States reached 172,500 tons between January and November this year, up 14.1 percent from the previous year.” Park Jae-hyuk reports.
Geopolitics: Ukraine Claims Killing of Russian General in Moscow Bombing
New York Times
“A general in charge of the Russian military’s nuclear and chemical weapons protection forces was killed by a bomb on a Moscow street on Tuesday, the Russian authorities said, in one of the most brazen assassinations since Russia’s full-scale invasion of Ukraine nearly three years ago.”
“The general, Igor Kirillov, died along with an aide after an explosive device planted in a scooter was detonated on Tuesday morning near the entryway to a residential building, Russia’s Investigative Committee, a law enforcement agency, said in a statement.”
“An official with Ukraine’s security service, known as the S.B.U., said that Ukraine was responsible for the killing. The official, who spoke on the condition of anonymity to discuss a sensitive intelligence operation, confirmed the details of the assassination given by Russia.”
“The S.B.U. considered General Kirillov a legitimate target, the official said. A day before his killing, the S.B.U. had charged General Kirillov in absentia, saying he was responsible for the ‘massive use of banned chemical weapons’ in Ukraine.” NY Times reports.
Dubai Property Giant Emaar Shares Climb to Highest Since 2008
Bloomberg
“Emaar Properties PJSC, the largest listed real estate firm in the United Arab Emirates, rose to the highest level in nearly 17 years as it extends a rally after boosting dividend payouts.”
“Its shares rallied by the maximum allowed 15% for a second day. The company — which built the Burj Khalifa skyscraper — on Friday said it will set up a long-term dividend policy based on cash flows, ditching the conservatism that has defined distributions for years. Its board intends to declare dividends at 100% of its share capital for 2024 and the next couple of years.”
“The outlook for the UAE property segment is positive, according to Neetika Gupta, vice president at Ubhar Capital SAOC. ‘There is a solid pipeline of new launches offering growth potential, off-plan sales remain consistent, and the demand backdrop is healthy,’ she said.”
“The rally in Emaar — the heaviest weight on the Dubai Financial Market General Index — drove the benchmark to the highest level since September 2014. The main gauge has rallied 25% this year, far outperforming the MSCI Emerging Markets Index’s 7% gains. It’s also the best performer among Gulf benchmarks in 2024.”
“Demand for real estate in Dubai has been booming post-pandemic, buoyed by liberal visa policies and low taxes that have attracted millionaires and investments.”
“Home prices have surged more than 60% since 2020. The luxury end of the emirate’s real estate market — including waterfront villas on the city’s man-made palm-shaped islands — has benefited from an influx of wealthy investors. Meanwhile, rents have also surged with home leases climbing 18% in the year through November.”
“‘Dubai is firing on all cylinders in terms of immigration, tourism, and property prices,’ says Hasnain Malik, head of equity and investment strategy research at Tellimer in Dubai. However, he sees increasing affordability risks and said valuations look stretched relative to the historical average.”
“Emaar is expected to report end-of-year profit of about 11.5 billion dirhams ($3.1 billion), according to data compiled by Bloomberg.” Omar El Chmouri reports.
“You can't cross the sea merely by standing and staring at the water.”
Rabindranath Tagore
regarding milei, its citizens are facing a few years of dire circumstances. i doubt he will be taking concrete actions soon, such as settling the burford lawsuit.
also, will be very difficult for non-chinese auto manufactureres to replace SK battery partnerships.