Emerging Markets Monitor - June 10
US-Listed China Stocks Tank, Global FDI Shaky in 2022: UN, US to India: Restrain the Russia Oil Buys, Bezos vs Ambani in Epic Cricket Battle, Shell Sells Nigeria Assets
The Top 5 Stories Shaping Emerging Markets from Global Media - June 9-10
US-Listed China Stocks Tank After Ant IPO Revival Reports Denied
Nikkei Asia
“U.S.-listed Chinese stocks tumbled Thursday after regulators in Beijing and Ant Group denied reports that Jack Ma's fintech company was dusting off shelved plans for an initial public offering.”
“The Nasdaq Golden Dragon China Index, which tracks major Chinese companies traded on U.S. exchanges, finished the day down 6.8% -- worse than the Nasdaq's 2.75% decline.”
“E-commerce platforms led the sell-off with Ant investor Alibaba Group Holding down more than 8%, JD.com falling 7.6%, and Pinduoduo sinking 9.6%.”
“The three largest Chinese equity exchange-traded funds were all down, led by the internet-focused KWEB finishing the day down 6.7%. The broader MCHI and the large-cap FXI both closed with declines of just under 4%.”
“U.S. stocks sold off broadly Thursday, with investors turning risk averse after the European Central Bank announced an interest rate hike and ahead of U.S. inflation data to be released on Friday.”
“But the declines in Chinese shares outpaced the rest of the market as the quick denial that an Ant IPO was being considered by the country's regulators threw cold water on optimism around Beijing tech regulation.” Nikkei Asia reports.
Global FDI Shaky in 2022 Amid Covid and Geopolitical Uncertainty: UNCTAD
The National
“Global foreign direct investment (FDI) could decline or remain flat at best this year after recovering to pre-coronavirus levels in 2021, as the impact of the Russia-Ukraine war and the continuing Covid-19 disruptions heighten uncertainty, a UN agency has said.”
“The probability of more interest rate increases in major economies, as well as negative sentiment in financial markets and a potential economic recession are also weighing on the outlook for FDI flows, the UN Conference on Trade and Development (Unctad) said in a report on Thursday.”
“Preliminary data for the first quarter of 2022 shows greenfield project deals declined by 21 per cent a year while cross-border mergers and acquisitions (M&A) and international project finance deals fell 13 per cent and 4 per cent, respectively, in a sign of risk aversion among investors.”
“Despite high profits, investment by multinational companies in new projects overseas was still a fifth below pre-pandemic levels in 2021. For developing countries, the value of greenfield deals stayed flat.”
“‘The global environment for international business and cross-border investment changed dramatically in 2022. The war in Ukraine — on top of the lingering effects of the pandemic — is causing a triple food, fuel and finance crisis in many countries around the world,’ Unctad said.”
“‘Investor uncertainty could put significant downward pressure on global FDI in 2022.’ FDI flows in 2021 rose to $1.58 trillion, up 64 per cent from less than $1 trillion in 2020 — the first year of the pandemic, with growth registered across all regions.”
“‘The 2021 growth momentum is unlikely to be sustained. Global FDI flows in 2022 will likely move on a downward trajectory, at best remaining flat,’ Unctad said. ‘However, even if flows should remain relatively stable in value terms, new project activity is likely to suffer more from investor uncertainty.’”
“The World Bank this week warned of stagflation and slashed its 2022 growth forecast for the global economy for the second time in 2022 as the Ukraine war, now in its fourth month, worsens the pandemic-induced slowdown.” Deena Kamel reports.
US Energy Envoy Asks India to Restrain Russian Oil Purchases
Financial Times
”The Biden administration’s leading international energy adviser has called on India not to go ‘too far’ as it increases imports of discounted Russian crude that has lost buyers in Europe.”
“Indian purchases of seaborne Russian oil have surged as exporters slash prices for Urals, the country’s main crude export stream, after European refineries began shunning the cargoes and the EU moved to end its dependence on Russian energy following Moscow’s invasion of Ukraine.”
“The deals are causing frustration in western countries, which are paying higher prices for oil in part due to efforts to restrict Russian export revenue that is being used to wage war.”
“Amos Hochstein, the US state department’s senior energy security adviser, said he had urged India not to profit from the discounted Russian oil while western consumers pay record fuel prices. ‘I’ve said, ‘Look, we don’t have secondary sanctions that can ban your purchases from Russia’, Hochstein told a Senate committee hearing on Thursday. ‘I would ask two things: ‘One, don’t go too far. Don’t look like you’re taking advantage of the pain that is being felt in European households and the United States. Second, make sure you negotiate well, because if you don’t buy [the oil], nobody else is.’”
“Exports of Urals have sold in recent weeks for almost $30 a barrel less than Brent crude, the international benchmark. But Russian export volumes have remained stable despite the widening western embargo on its oil, while Brent has risen by almost 60 per cent since the start of year to settle at $123.07 a barrel on Thursday, delivering a windfall to the Kremlin.” The FT reports.
Bezos vs. Ambani in Fight for the Super Bowl of Cricket Broadcast Rights
Bloomberg
“Jeff Bezos and Mukesh Ambani, two of the world’s richest men, are set for another clash. This time the fight is over media rights to the Super Bowl of cricket, one of the world’s fastest-growing sporting events that draws 600 million viewers and has a brand value of almost $6 billion.”
“The billionaires’ companies are expected to be the top two contenders at a June 12 Indian Premier League auction, which is likely to lure several bidders for separate, five-year telecasting and online streaming contracts in different geographies. The tycoons are preparing aggressive game plans to ensure a win, according to people familiar with the matter. Other fierce competitors include Walt Disney Co., which held the rights until this year’s just-concluded season, and Sony Group Corp.”
“For the two first-time participants, there’s far more at stake than just a shot at becoming the No. 1 media player in a country of 1.4 billion people. The English sport enjoys cult-like status in the former British colony. Both Ambani’s Reliance Industries Ltd. and Bezos’s Amazon.com Inc. are betting the game will serve as a gateway to their ultimate goal: Dominating an Indian consumer market that’s increasingly going online.”
“‘The bidding action will be a bet on the India story over the coming decade,’ said Karan Taurani, a media analyst at Mumbai-based Elara Capital. ‘Bidders are putting money on the promise that data-consuming Indians will dictate the fortunes of every business, from retail to banking, and from travel to education.’” Bloomberg reports.
Two Local Oil Companies Set to Buy One of Shell’s Key Nigeria Assets
Business Insider Africa
“Heirs Oil and Gas Ltd and ND Western Ltd are set to make two separate final offers, this week, to acquire Shell Petroleum's 30% stake in the Shell Petroleum Development Company of Nigeria (SPDC).”
“Both companies beat out Seplat Energy Plc and Sahara Group Ltd to emerge as the last two potential bidders. Sources familiar with the situation, who spoke anonymously to Bloomberg, disclosed that the companies are expected to make their final offers to Shell latest by June 10, 2022.”
“Recall that Shell had in May 2021 announced its intent to divest its 30% stake in SPDC, noting that the venture no longer aligns with its long-term energy transition goals. The company's CEO, Ben van Beurden, also cited growing challenges associated with oil exploration in Nigeria's oil-rich Niger Delta region, including but not limited to oil theft, pipeline vandalism, oil spillage, etc.
“At the time of announcement last year, Wood Mackenzie had valued Shell's 30% stake in SPDC at $2.3 billion based on an oil price rate of $50 per barrel. Since then, oil prices have climbed to $123.7 per barrel (Brent crude today), pointing to the possibility of an upward valuation of the assets.” Business Insider Africa reports.
“Oh threats of Hell and Hopes of Paradise!
One thing at least is certain - This Life flies;
One thing is certain and the rest is Lies -
The Flower that once has blown forever dies.”
― Omar Khayyam, Rubáiyát of Omar Khayyám