Emerging Markets Monitor - July 26
Bolsonaro Re-Election Bid, Russia Cuts Nord Stream Capacity, Alibaba Seeks HK Listing, Oil-Rich Guyana Pledges to Diversify, India Airlines See Robust Recovery
The Top 5 Stories Shaping Emerging Markets from Global Media - July 26
Bolsonaro Launches Re-election Campaign, Trails in Polls
BBC
“Brazilian President Jair Bolsonaro has officially launched his re-election campaign in Rio de Janeiro.”
“A recent opinion poll suggests the far-right leader is trailing as much as 19 percentage points behind his main left-wing rival, Luiz Inácio Lula da Silva. Lula is known for his policies to lift people out of poverty.”
“In his nomination speech, Mr Bolsonaro promised to retain a welfare programme that makes cash payments to poorer Brazilians. The first round of the election will be held on 2 October with a second round scheduled for 30 October if none of the candidates gets 50% of the votes.”
“…In his speech, Mr Bolsonaro, who is a former army captain, suggested to his supporters that the army shared his concerns. The army is on our side. It's an army that doesn't accept corruption, doesn't accept fraud,’ he said.”
“During the event, Mr Bolsonaro also announced that former defence minister General Walter Braga Netto would be his vice-presidential running mate. Lula, who previously served as president from 1 January 2003 to 1 January 2011, was officially nominated by the left-wing Workers' Party on Thursday.” BBC reports.
Russia Cuts Gas Deliveries to Europe Via Nord Stream 1
Financial Times
“Russia will slash gas supplies through its largest pipeline to Germany to just a fifth of capacity later this week in a move that threatens to leave the continent short of critical supplies ahead of the winter.”
“State-owned energy group Gazprom said it would cut existing flows on the Nord Stream 1 pipeline in half to just 20 per cent of capacity from Wednesday, having already lowered them to 40 per cent last month.”
“European politicians have decried Russia’s ‘weaponisation’ of gas supplies. The Gazprom move came as German business confidence fell to its lowest level for more than two years in the latest sign that Europe’s largest economy is teetering on the brink of recession.”
“Companies across Germany became more gloomy about their current predicament and the outlook for the next six months, according to the Ifo Institute’s closely watched index of business confidence.”
“Second-quarter gross domestic product figures out on Friday are expected to show growth of only 0.1 per cent, according to economists polled by Reuters…European capitals will interpret Gazprom’s action as Russian retaliation for sanctions imposed after its invasion of Ukraine. Europe is struggling to fill gas storage facilities, leading to warnings of rationing for industry and concerns about shortages for domestic users.” The FT reports.
In Bid to Diversify Investor Base, Alibaba Seeks Hong Kong Primary Listing
South China Morning Post
“E-commerce giant Alibaba Group Holding said on Tuesday that it would apply for a primary listing in Hong Kong to widen and diversify its investor base.”
“Alibaba currently maintains a secondary listing on the main board of the Hong Kong stock exchange. After completing the primary listing process, which is expected before the end of the year, Alibaba will become a dual-primary listed company, with American depositary shares (ADS) on the New York Stock Exchange and ordinary shares in Hong Kong, the company said in a statement.”
“‘We have received approval from the board to apply to add Hong Kong as another primary listing venue, in the hopes of fostering a wider and more diversified investor base to share in Alibaba’s growth and future, especially from China and other markets in Asia,’ said Daniel Zhang Yong, the chairman and chief executive of Alibaba.” SCMP reports.
Guyana - World’s Fastest Growing Economy - Seeks to Diversify Away From Oil
Bloomberg
“Guyana, the world’s fastest-growing economy, plans to use its newfound oil and gas wealth to fund investments in other sectors that will reduce its dependence on hydrocarbons, its president said.”
“The government wants to use the revenues from its massive offshore oil deposits to finance investments in mining, tourism, agriculture and other sectors, President Mohamed Irfaan Ali said during a trip to the US. “
“The International Monetary Fund forecasts Guyana’s economy will grow 47% this year on the back of oil exploration, and the government forecasts output of about 800,000 barrels per day by 2025. The offshore oil deposits, which Exxon Mobil Corp. first successfully drilled in 2015, are so large relative to Guyana’s population of 780,000 that some projections show the country on track to overtake Kuwait to become the world’s largest per-capita crude producer.”
“The remote South American nation, which borders Venezuela and Brazil, plans to use the influx of funds to build roads and infrastructure to open up other areas of the economy, including its gold, diamond, bauxite and copper mines, Ali said.”
“The country also wants to protect its Amazonian rainforest, Ali said. The thick jungles which cover most of its territory have the potential to generate more than $100 million per year in carbon credits, he said.” Bloomberg reports.
India Airlines Preparing for Robust Surge in Travel
The National
“Airlines in India are accelerating their fleet expansion plans as they prepare for a surge in growth amid the sector's recovery from the coronavirus pandemic.”
“‘The Indian aviation industry is in a robust growth phase,’ says Neha Singh, an associate partner specialising in aviation at Link Legal. ‘A growing strong middle class … [is] key to sectoral growth. Fleet expansion is inevitable.’”
“Air India, which was taken over by Tata Group in January after the government privatised the debt-laden carrier, is considering ordering up to 300 new planes to overhaul its fleet, according to Bloomberg.”
“India's Jet Airways is planning to return to the skies this year and is considering a deal to buy new jets, while budget carrier Akasa Air will launch its first flights next month after signing an agreement in November last year to purchase 72 Boeing 737 Max aircraft.” The National reports.
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