Emerging Markets Monitor - March 18
ICC Issues Arrest Warrant for Putin, EM Stocks Wobble on Banking Angst, Lat-Am Stocks Choppy Waters, Xi to Visit Putin in Moscow, Africa Tech and SVB Collapse
The Top 5 Stories Shaping Emerging Markets from Global Media - March 18
ICC Issues Arrest Warrant for Putin for War Crimes
“The International Criminal Court said Friday that it has issued an arrest warrant for Russian President Vladimir Putin for war crimes, accusing him of personal responsibility for the abductions of children from Ukraine.”
“It was the first time the global court has issued a warrant against a leader of one of the five permanent members of the U.N. Security Council. The ICC said in a statement that Putin ‘is allegedly responsible for the war crime of unlawful deportation of (children) and that of unlawful transfer of (children) from occupied areas of Ukraine to the Russian Federation.’”
“…Its practical implications, however, could be limited as the chances of Putin facing trial at the ICC are highly unlikely because Moscow does not recognize the court’s jurisdiction or extradite its nationals. But the moral condemnation will likely stain the Russian leader for the rest of his life — and in the more immediate future whenever he seeks to attend an international summit in a nation bound to arrest him.”
“‘So Putin might go to China, Syria, Iran, his ... few allies, but he just won’t travel to the rest of the world and won’t travel to ICC member states who he believes would ... arrest him,’ said Adil Ahmad Haque, an expert in international law and armed conflict at Rutgers University.” AP reports.
EM Stocks, Currencies Trim Gains on Banking Angst
“Traders pared bets on emerging-market stocks, bonds and currencies on Friday as worries over the health of the banking sector mounted, stoking jitters of a global recession.”
“The main MSCI indices for emerging-market currencies and stocks trimmed daily advances during the US session amid a broad selloff in riskier assets, as investors worried the $30 billion lifeline that the biggest US lenders threw to First Republic Bank won’t be enough to prevent an economic downturn.”
“‘EM is simply a passenger in the current global macro volatility train,’ said Patrick Esteruelas, head of research at Emso Asset Management. ‘We are completely at the mercy of whether the market prices a systemic financial meltdown or instead believes that the combination of unique vulnerabilities of a sub-segment of banks and a strong response from the authorities is enough for us to trade fundamentals again.’”
“The Mexican peso and Brazilian real paced declines among major currencies, followed by the Chilean peso, while an MSCI gauge of Latin American shares posted its worst week since June. Sovereign spreads from emerging-market dollar bonds rose to the highest since November, JPMorgan Chase & Co. data shows.”
“Traders continued to hedge against further swings in the Indonesian rupiah, Brazilian real and Turkish lira, according to gauges of implied volatility.”
“Worries about US regional lenders after the collapse of Silicon Valley Bank and troubles at Credit Suisse Group AG had sent measures of implied volatility for developing currencies and stocks this week to the highest since at least December.” Bloomberg reports via Yahoo Finance.
Lat-Am Stocks Set for Worst Week in Nine Months
“Latin American stocks and currencies fell on Friday at the end of a tumultuous week when more large lenders exacerbated fears of a global banking crisis, prompting investors to flee riskier assets.”
“The MSCI's index for Latin American equities declined 0.9%, falling for six of the last seven trading sessions and set to clock its worst weekly performance in nine months.”
“Brazil's Bovespa stock index which houses some of central and south America's biggest lenders, shed 1%…Sentiment remained fragile after a roller-coaster week sparked by the failure of Silicon Valley Bank in the U.S. and concerns over the future of Swiss lender Credit Suisse despite a $54 billion lifeline from Switzerland's central bank.”
"‘Latam markets are going to be volatile as long as concerns in the U.S. and Europe are not mitigated, but again it's just going to be a reflection of what is happening externally,’ said Alfredo Coutinho, director of Moody's Analytics for Latin America. On the brighter side, analysts, including Coutinho, have noted that better fundamentals mean Latam financial institutions should be relatively resilient compared to their global peers.” Reuters reports.
Xi Jinping to Visit Vladimir Putin Moscow
“Chinese president Xi Jinping will pay a state visit to Russian president Vladimir Putin on Monday in a move that will reaffirm the leaders’ strong ties despite western condemnation of Moscow’s invasion of Ukraine.”
“…China has presented itself as a potential mediator in the Ukraine conflict, a claim viewed with scepticism in Europe and the US because of Xi and Putin’s close relationship, sealed just before the hostilities erupted when the pair declared a ‘no limits’ partnership.”
“Over the past year, Xi has maintained regular contact with Putin while Chinese state media have parroted Russian propaganda on the war, describing the situation as a ‘crisis’ rather than an invasion. The Chinese leader has not spoken to Ukrainian president Volodymyr Zelenskyy since the war began.”
“…While China gave no further details on the agenda of the Russia state visit, the Kremlin said Putin and Xi would discuss ‘issues of developing relations of all-encompassing partnership and strategic interaction between Russia and China’.” The FT reports.
Should African Startups Worry About SVB Collapse?
“The collapse of Silicon Valley Bank (SVB) last week has sent shockwaves through the tech industry as the largest lender to venture capital funds suddenly seized up. Since its founding in 1983, SVB – the 16th largest bank in America – has played a crucial role in the development of the influential Silicon Valley ecosystem by providing crucial financial support to startups and investors alike.”
“…The immediate impact on Africa’s tech ecosystem appears to be mixed. As Nigerian tech journalist Frank Eleanya noted in a recent article for BusinessDay, ‘Nigerian startup founders say the impact on the local ecosystem will be minimal,’ mainly due to the fact that only a small number banked with SVB.”
“…But if ripple effects are not yet fully apparent, observers believe that the long-term implications could be more significant. Venture capital funds, in particular, may be less willing to take risks in the wake of SVB’s collapse, potentially slowing down startup funding across the continent after a record-breaking year of $4.8bn raised by the end of 2022.”
“‘Expect a slowdown in investments on the continent, more pulled term-sheets and delays in getting that critical follow-on funding,’ warns Ngozi Dozie, co-founder of digital finance platform Carbon, in a blog post published on Monday.” African Business reports.
The greatest glory in living lies not in never falling, but in rising every time we fall. ~Nelson Mandela