Emerging Markets Monitor - November 29

Chinese Protestors Challenge Xi, India Stocks Soar, Lat-Am Stagnation, S. Korea Warns North on Nuke Test, UAE's $150 Billion Energy Plans

The Top 5 Stories Shaping Emerging Markets from Global Media - November 29

Chinese Protests Put Xi Jinping in a Bind

Wall Street Journal

“President Xi Jinping faces a difficult choice between loosening China’s zero-tolerance Covid-19 policy or doubling down on restrictions that have locked down neighborhoods and stifled the country’s economy over the past three years.”

“‘Xi’s leadership is in a bind,’ said Yuen Yuen Ang, a political scientist focused on China at the University of Michigan. ‘If they compromise and relax zero-Covid, they fear it will encourage mass protests. If they repress more, it will create wider and deeper grievances.’”

“Protesters across China have directly challenged the authority of the Chinese leader and the Communist Party in scenes unthinkable just a month ago, when Mr. Xi secured a third term in power.”

“In Shanghai over the weekend, protesters used call-and-response chanting to demand political change. In Beijing, crowds shouted ‘Freedom.’ In other large cities, demonstrators marched holding blank sheets of paper—a swipe at government censorship.” Lingling Wei reports.

Meanwhile, on Tuesday, the Wall Street Journal further reported:

“Shares of U.S.-listed Chinese companies jumped on Tuesday after Beijing said it would accelerate vaccination of the elderly, a sign investors believe would pave the path for loosening Covid-19 restrictions amid nationwide protests.”

“The Golden Dragon China Index, which tracks dozens of Chinese companies listed on American exchanges, climbed 5.8% on Monday. The American depositary receipts of several Chinese internet companies—including Alibaba, Pinduoduo, and Baidu—also gained more than 5%.”

“Despite the recent rebound in Chinese stocks, some investors believe it's still too early to bet on a long-term recovery. John Plassard, a director at Swiss asset management firm Mirabaud Group, said the firm has not added Chinese stocks back to its portfolio.”

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India’s Nifty Index Hits All-Time High

Reuters

“India's blue-chip Nifty 50 stock index hit a record high on Monday, hours after the benchmark Sensex also hit an all-time high, boosted by oil marketing companies as crude prices slid on demand concerns due to protests in China over COVID-19 curbs.”

“The NSE Nifty 50 index .NSEI jumped 0.53% to an all-time high of 18,611.05, breaking a record it held since Oct. 19, 2021. Earlier in the day, the S&P BSE Sensex index .BSESN rose 0.61% to an all-time high of 62,674.49.”

“The gains in Indian equities defied the weakness in other Asian markets, which fell as rare protests in major Chinese cities against strict zero-COVID curbs raised concerns about the growth implications for the world's second-largest economy.”

“Those concerns also caused a slide in oil prices as China is a top importer. However, in general, oil-importing countries like India tend to benefit from lower crude prices.”

“The gains in Indian oil companies were led by Reliance Industries RELI.NS, India's most valuable company, which surged 3.64%. Oil marketing firm Bharat Petroleum Corp BPCL.NS jumped 4.31%.” Reuters reports.

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Latin America Stagnation “Worse than the 1980s,” Says Top UN Official

Financial Times

“Weak investment, low productivity and inadequate education have condemned Latin America to a period of economic failure even worse than the ‘lost decade’ of the 1980s, according to the top UN economic official in the region.”

“José Manuel Salazar-Xirinachs, new head of the UN Economic Commission on Latin America and the Caribbean (ECLAC), said the stagnation of the past decade contrasted not only with the 5.9 per cent annual growth of the 1970s but also the 2 per cent achieved in the 1980s, a turbulent decade for Latin America characterised by a wave of debt crises.”

“‘This is terrible, this really ought to be a huge red light,’ he said of the descent into stagnation, with average annual economic growth in the decade to 2023 set to be just 0.8 per cent. ‘The challenge is how to return to this line of 5.9 per cent a year,’ he said.”

“Salazar-Xirinachs, speaking to the Financial Times from ECLAC’s base in Chile, also called on the region’s three newest leftwing leaders to prioritise growth over a desire to share the spoils of wealth. Brazil, Colombia and Chile have all elected leftwing presidents in the past year.”

“‘In general the progressives in Latin America have been preoccupied with distribution but not with wealth creation,’ said the Costa Rican economist. ‘We need both and they go hand in hand.’”

“Latin America has grown more slowly than almost any other part of the world over the past decade. The region was hard hit by the pandemic, suffering more than a quarter of all recorded coronavirus deaths, despite having only 8.4 per cent of the world’s population.” Michael Stott reports.

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S. Korea’s Yoon Warns of Unprecedented Response if N. Korea Conducts Nuke Test

Korea Times

“President Yoon Suk-yeol said any new nuclear test by North Korea will be met with an international response ‘not seen in the past’ and called on China to play a greater role to deter the North's provocations.”

”Yoon made the remarks in an interview with Reuters, released Tuesday, amid growing concerns the North could conduct its seventh nuclear test after a series of recent missile launches.”

”Should the North forge ahead with a test, Yoon vowed a response ‘not seen in the past’ by South Korea and its partners. ‘It would be extremely unwise for North Korea to conduct a seventh nuclear test,’ Yoon was quoted as saying in the interview.” Korea Times reports.

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UAE Plans Global Energy Push With $150 Billion of Spending

Bloomberg

“The United Arab Emirates’ main energy company will boost investment to $150 billion over the next five years, speed up an increase in oil-production capacity and list some of its natural gas business.”

“Abu Dhabi National Oil Co. also said it would expand its international gas, chemicals and clean-energy operations. The moves are part of a push by the company and the UAE to raise output of hydrocarbons while at the same time neutralizing planet-warming emissions by 2050.”

“The decisions were made at an annual board meeting on Monday lead by the UAE’s president, Sheikh Mohammed bin Zayed. The OPEC member has, along with neighboring Saudi Arabia, criticized Western governments and investors for trying to transition away from fossil fuels too quickly. It’s pointed to this year’s surge in prices as evidence there’s been too little investment in oil and gas exploration in recent years.”

“‘The world needs maximum energy, minimum emissions and it needs all the energy solutions if we are to ensure global energy security,’ Sultan al Jaber, Adnoc’s chief executive offer, said in a statement.”

“Adnoc will combine its liquefied natural gas and gas-processing arms in a new unit. It will sell a minority share of the business, called Adnoc Gas, through an initial public offering in Abu Dhabi in 2023.”

“Adnoc Gas will be one of the world’s largest gas-processing entities, Adnoc said, with a capacity of 10 billion cubic feet a day across eight onshore and offshore sites. It will have a pipeline network of more than 3,250 kilometers (2,019 miles).” Anthony Di Paola reports.

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