Emerging Markets Monitor - December 14
Bankers Flock to Dubai for IPO Rush, Xi-Putin Alliance Grows, Peru Fiery Protests, Vietnam's Clean Energy Transition Gets $15B Boost, Mars Wrigley Targets EM
The Top 5 Stories Shaping Emerging Markets from Global Media - December 14
Dubai Is New Hotspot for Global Bankers Chasing IPO Deals
Bloomberg
“London, meanwhile, is having its worst year since 2009. One investment banker based in the UK capital joked that most of his local colleagues who handle IPOs are either in the pub or in Dubai these days.”
“In a year that’s seen the worst slump in initial public offerings since the financial crisis, investment bankers covering deals in the Middle East are busier than ever.”
“As listings dwindle in London, Hong Kong and New York, the United Arab Emirates and Saudi Arabia have emerged as new IPO hotspots buoyed by high oil prices and investor inflows. Listings in the region have fetched $22.6 billion this year — over half of the proceeds in Europe, the Middle East and Africa. Investor demand is strong, with this week’s dual listing of Americana Restaurants International Plc drawing $105 billion of orders for a $1.8 billion offering.”
“The Middle East frenzy — which has seen 42 regional listings in just over 11 months — is all the more significant given that new offerings are almost at a standstill in other financial centers as market volatility and rising interest rates impact deals. Eight out of this year’s 10 largest IPOs in EMEA are in the Gulf, setting the region on course for its second-best year for share sales, eclipsed only by 2019 when Aramco pulled off its record $29.4 billion listing. And the rush of deals is showing no sign of slowing.”
“Abu Dhabi National Oil Co. picked Goldman Sachs Group, Bank of America Corp. and First Abu Dhabi Bank PJSC as joint global coordinators for the IPO of its natural gas business next year, Bloomberg reported this week, in what’s set to become one of Abu Dhabi’s largest listings.”
“London, meanwhile, is having its worst year since 2009. One investment banker based in the UK capital joked that most of his local colleagues who handle IPOs are either in the pub or in Dubai these days.” Julia Fioretti reports.
Geopolitics: Xi Doubles Down on Putin Bet, Aligning Closer with Moscow
Wall Street Journal
“China’s leader Xi Jinping has in recent months tried to put public distance between Beijing and Moscow as Russia has suffered defeats in its war on Ukraine.”
“Behind the diplomatic appearances, however, Mr. Xi is deepening his long-term bet on Russia.”
“In recent weeks, he has instructed his government to forge stronger economic ties with Russia, according to policy advisers to Beijing, building on a trade relationship that has strengthened this year and become a lifeline to Moscow in the face of Western pressure.”
“The plan includes increasing Chinese imports of Russian oil, gas and farm goods, more joint energy partnerships in the Arctic and increased Chinese investment in Russian infrastructure, such as railways and ports, the advisers say.”
“Russia and China are also conducting more financial transactions in the ruble and yuan, rather than the euro or dollar, a move that helps insulate the two against future sanctions and put the Chinese currency into wider circulation.” WSJ reports.
Editor’s Note: The growing China-Russia alliance fits with a broader theme discussed in our recently published newsletter, Emerging World Investor Vol. I. The growing Russia/China vs US/Europe geopolitical conflict ranks as one of the three tectonic collisions shaping our world today. Check it out below:
Peru Explodes Into Fiery Protest Amid Yet Another Political Crisis
Reuters
“As Peru careers from one political crisis to another, the country has exploded in protest, with at least seven dead in the last week and the smoke of fires and tear gas hanging over city streets. A way out seems distant.”
“The spark of the current unrest was the ouster and arrest of leftist leader Pedro Castillo after he tried to dissolve Congress illegally. It followed a months-long standoff where lawmakers impeached him three times, the final time removing him from office.”
“Peru has been one of the economic stars of Latin America in the 21st century, with strong growth lifting millions out of poverty. But the political turmoil is increasingly threatening to derail its economic stability, with ratings agencies warning of downgrades, blockades impacting major mines in the world's no. 2 copper producer, and protesters demanding Congress and new president Dina Boluarte step down.” Reuters reports.
Rich Nations Mobilize $15.5 Billion for Vietnam Coal-to-Clean Energy Transition
Climate Home News
“Wealthy countries and banks will provide $15.5 billion to help Vietnam transition away from coal, the UK foreign ministry announced on Wednesday.”
“Half of the money is to come from governments, the Asian Development Bank and the International Finance Corporation. The rest will come from private investment co-ordinated by the Glasgow Financial Alliance for Net Zero.”
“An initial amount of $15.5 billion in public and private finance will be disbursed over the next three to five years, according to the press release.”
“The deal will help Vietnam to peak its greenhouse gas emissions by 2030, bringing forward a previous 2035 projection, limit its peak coal capacity to 30.2 gigawatts (GW) instead of an initially planned 37 GW, and source 47% of its power from renewable energy by 2030, the statement said.”
“The contributors claim delivering on these targets will save around 500m tonnes of carbon dioxide by 2035. That’s about the same as the nation of Turkiye emits every year.” Climate Home News reports.
Mars Wrigley Targets Emerging Markets for Chocolate Growth
The Takeout
“Beginning in 2019, Mars Wrigley created an emerging markets section of its business...Rather than fight with competitors such as The Hershey’s Company, which owns Reese’s, KitKat, and Heath bars among others, for a piece of the same pie, the company decided to target areas where chocolate consumption was low.”
“These emerging markets include countries such as Mexico, Brazil, Saudi Arabia, the United Arab Emirates, the Philippines, Kenya, Nigeria, Egypt, India, and South Korea. ‘The amount of chocolate that an Indian or a Mexican consumes is 10 times or less than a European,’ Blas Maquivar, head of global emerging markets at Mars Wrigley, told the Financial Times.”
“According to Maquivar, the average consumer outside of Europe eats around 500 grams of chocolate per year, with those in Kenya and Nigeria eating as little as 200 grams—an average European consumer eats 7 kilograms of chocolate per year.”
“Maquivar also discussed the new strategy in a 2021 podcast episode with McKinsey & Company, during which he noted that in order to reach customers in these developing markets pricing, packaging and format of the snack is crucial. ‘The ingredients to make chocolate—cacao, sugar, milk—are significantly more expensive than the wheat to make a cookie. In the developed world, it’s the other way around. Chocolate and biscuits and cookies basically have the same penetration,’ said Maquivar to the podcast host.”
“Mars Wrigley’s strategy goes beyond spending more on advertising in these regions, it also includes creating products specifically meant to satisfy the palates of the people living in those areas. For example, the company recently launched a Snickers bar with ‘caramelo and bacon’ in Brazil and one with pistachio, saffron, and almond in India.” The Takeout reports.
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