Emerging Markets Monitor - November 4
China Stocks Up on Reopening Hopes, Vietnam Cracks Rattle Investors, Tiger Global: No New China Equities, New Pakistan Protest Calls, Korean Peninsula Heats Up
The Top 5 Stories Shaping Emerging Markets from Global Media - November 4
China Stocks Rise on Reopening Hopes
Financial Times
“Chinese stocks in Hong Kong were on track on Friday for their best week in more than seven years, amid rumours that the country could begin reopening to the rest of the world early next year and reports that US regulators had completed a review of Chinese audit reports earlier than expected.”
“Hong Kong’s Hang Seng China Enterprises index rose 6 per cent, while the CSI 300 index of Shanghai And Shenzhen listed shares jumped 3.3 per cent. The leap for the China Enterprises index put it on track for its largest weekly rise since 2015.”
“Market sentiment was bolstered by rumours circulating on social media that Zeng Guang, the former head of China’s Center for Disease Control and Prevention, had said at a conference held by Citigroup that the country could reopen its border with Hong Kong in early 2023, with more relaxations on international border controls to follow.”
“Citi declined to comment on his alleged remarks. Separately, traders said shares were getting a lift from a Bloomberg report, citing unnamed sources, stating that a US review of Chinese corporate audit papers in Hong Kong had finished early.”
“…Calculations by the Financial Times based on exchange data show mainland investors bought roughly $3.7bn worth of Hong Kong-listed stocks this week. Chinese equities have swung sharply in recent sessions, amid a back-and-forth of rumours suggesting a pivot away from Xi’s stringent zero-Covid policy is imminent, and official pushback stating that this is not the case.”
“Even after the rise on Friday, however, China’s benchmark CSI 300 index is still down by 33 per cent this year, once the depreciation of the renminbi against the dollar is taken into account.” The FT reports.
Cracks in Vietnam Rattle Investors
Bangkok Post
“Financial markets in Vietnam, Asia’s fastest-growing economy, are in an unsettling slide as a crackdown on property lending, a falling currency and rising interest rates heap pressure on banks and rattle confidence.”
”The Vietnamese dong and the benchmark stock index are heading for their worst annual performance since the 2008 financial crisis, with only the Hong Kong and Russian stock markets poised for more losses globally this year.”
The selling, spilling over from property stocks and bonds to the wider market, has soured what foreign fund managers had touted as a promising post-Covid bet on a country drawing manufacturing investment from the likes of Apple and Samsung.” Bangkok Post reports.
Tiger Global Halts New Chinese Equities Investments
Wall Street Journal
“Longtime China investor Tiger Global Management has hit pause on investing in Chinese equities, said people familiar with the matter, as the firm reassesses its exposure to the world’s second-largest economy after President Xi Jinping cemented his control over the country.”
“Tiger executives, including founder Charles ‘Chase’ Coleman, have told others that Mr. Xi’s reelection and his stacking of the Communist Party’s leadership with loyalists at the recent party Congress could increase geopolitical tensions and means the country’s Zero-Covid policy will likely continue, the people said.”
“China’s determination to stamp out Covid-19 outbreaks with lockdowns and other restrictions has been a major drag on its economic growth. Concerns about what Beijing might attempt to do with Taiwan, a democratically self-ruled island, also increased after the Chinese Communist Party recently amended its charter to include the phrase ‘firmly oppose Taiwan independence’ and elevated a military commander familiar with Taiwan.”
“…Investors have been scaling back their China exposure as a series of regulatory crackdowns on internet-platform companies and for-profit education businesses inflicted heavy losses on many funds and highlighted the perils of investing in an authoritarian state. But the recent congress has caused even longtime China bulls to rethink their exposure.”
“Tiger wants more clarity about issues such as how vigorously China will pursue growth and whether the country will invade Taiwan before investing fresh dollars in Chinese equities, said people familiar with the firm. Some could come from the Politburo central committee economic work conference in December, which sets the tone for the coming year’s economic agenda and usually is chaired by Mr. Xi.” WSJ reports.
Protest Calls in Pakistan After Ex-PM Imran Khan Shot in Shin
Al Jazeera
“A day after a bullet wounded former Pakistan prime minister Imran Khan while he was leading ‘a long march’ to the capital, his party announced country-wide protests on Friday afternoon.”
“Khan, who is the chief of the Pakistan Tehreek-e-Insaf (PTI) party, sustained minor injuries when he was shot while atop a vehicle in Wazirabad city in Punjab province. He was immediately taken to Lahore for treatment, where doctors operated on him late on Thursday. He is in a stable condition.”
“Senior PTI leaders Asad Umar and Fawad Chaudhry tweeted the party’s intention to carry out nationwide demonstrations after Friday prayers. Khan will later give a press conference at about 4pm local time (11:00 GMT).”
“…Khan began his long march from Lahore to Islamabad on October 28 demanding early elections, which are otherwise scheduled for October 2023. Questions about whether the rolling protest would continue were raised after the attack on Thursday.” Al Jazeera reports.
South Korea Scrambles Fighter Jets After Detecting 180 North Korean Warplanes
CNN
“South Korea scrambled about 80 fighter jets after detecting a large number of North Korean warplanes during a four-hour period Friday, the country’s military said, in a further escalation of regional tensions.”
“In a statement, the South Korean military said it spotted about 180 North Korean military aircraft between 11 a.m. and 3 p.m. local time, a day after Pyongyang is believed to have conducted the failed test of an intercontinental ballistic missile (ICBM).”
“Tensions in the Korean Peninsula began rising Monday, when the ‘Vigilant Storm’ joint military drills began between the United States and South Korea, involving hundreds of aircraft and thousands of service members from both countries, according to the US.” CNN reports.
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