Emerging Markets Monitor - November 15
Goldman Chases Rising Middle East Deals, China Economy Falters, Iran Bazaar Strikes, Nigeria Crypto Hit by FTX Fall, Indonesia Attracts $20B for Net Zero
The Top 5 Stories Shaping Emerging Markets from Global Media - November 15
Goldman, Other Major Banks Expanding in Middle East to Tap Deal Flow
Bloomberg
“Goldman Sachs Group Inc. is expanding across the Middle East as growing foreign interest and positive economic factors prompt a boom in dealmaking and a flow of funds into the region.”
“The Wall Street firm sees private wealth as a ‘big area of opportunity’ and is hiring wealth managers in the United Arab Emirates and Saudi Arabia, Zaid Khaldi, co-head of Goldman Sachs in the Middle East and North Africa, said in an interview. The bank is also recruiting for investment banking, sales and trading, as well as for Islamic finance, where it’s seeing rapid growth, Khaldi said, without giving specifics.”
“…In Saudi Arabia -- the region’s largest market, Goldman Sachs has ‘more than doubled’ its head count in recent years and plans to move into a bigger office next year to ‘have more capacity to grow further,’ he said.”
“Flush with cash from a commodity boom and home to some of the world’s biggest sovereign funds that control more than $3 trillion in assets, the Persian Gulf is emerging as a bright spot globally for initial public offerings and merger and acquisitions. To capture the flurry of activity -- as deals dry up in other parts of the world -- banks including JPMorgan Chase & Co. and Rothschild & Co. are also expanding in the region.”
“In the Middle East, Khaldi expects this year’s rush of initial public offerings to continue into 2023 as the demand for regional assets grows and more private companies come to the market. Goldman Sachs has several mandates for IPOs which should come to the market in the next 12 months, and the retail sector is expected to be particularly active, he said.”
“Persian Gulf listings have fetched about $18 billion this year, just under half of the listing proceeds from across Europe, the Middle East and Africa. Demand is coming from both local and international buyers, with local demand particularly strong, Khaldi said.” Bloomberg reports.
China Economy Loses Momentum
Channel News Asia
“China's economy suffered a broad slowdown in October as factory output grew more slowly than expected and retail sales fell for the first time in five months, underscoring faltering demand at home and abroad.”
“The world's second-largest economy is facing a series of headwinds including protracted COVID-19 curbs, global recession risks and a property downturn. In a sign of persistent weakness in sector, data on Tuesday (Nov 15) also showed property investment falling at its fastest pace since early 2020.”
“The downbeat data poses a challenge for Chinese policymakers as they steer the US$17 trillion dollar economy through choppy waters, following recent moves to ease some COVID-19 curbs and give financial support to the struggling property sector.”
“…Retail sales, a gauge of consumption, fell for the first time since May, when Shanghai was under a city-wide lockdown. Sales dropped 0.5 per cent, against expectations for a 1.0 per cent rise and compared with a 2.5 per cent gain in September.” Channel News Asia reports.
Iran Shopkeepers Strike in Support of Protest Movement
Wall Street Journal
“Iranian shopkeepers across the country closed their stores and went on a planned three-day strike starting Tuesday in solidarity with a monthslong protest movement demanding the ouster of the clerical leadership.”
“The strikes this week are also meant to mark the three-year anniversary of a violent crackdown on protesters in 2019, the last time Iranians seriously challenged the ruling establishment.”
“In Tehran, shopkeepers in the Grand Bazaar, a key node in the country’s economy, closed their stores and chanted ‘death to the dictator.’ Security forces were out in large numbers in the capital, deployed in locations where protests have previously taken place. Steelworkers in the capital and the city of Isfahan also went on strike, according to footage and pictures on social media.”
“Across the western Kurdistan province, which since the beginning of the movement has seen some of the most active protests, shopkeepers closed markets in at least 18 cities, according to Hengaw, an Oslo-based human-rights organization focused on the Kurdish region.”
“The strikes compound pressure on Iranian authorities as Iran’s labor unions and workers in recent weeks added momentum to the protests that have also been fueled by high-school and university students.”
“Students of numerous universities in Kurdistan boycotted classes on Tuesday. Footage circulated by Hengaw showed some students chanting: ‘For every one that you kill, a thousand people will rise.’” Sune Engel Rasmussen reports.
Nigeria’s Nestcoin Feels the Sting of FTX Collapse
Financial Times
“Nestcoin, a Nigerian start-up, held funds raised from investors on FTX and now plans to cut a large proportion of its staff as the failure of Sam Bankman-Fried’s crypto exchange cascades around the world.”
“An investor in crypto, gaming and digital art, Nestcoin raised $6.45mn in an early funding round, with backers that included Alameda Research, Bankman-Fried’s trading shop. The amount was the largest ever raised by a Nigerian start-up at such an early stage. It held about $4mn on FTX, which represents nearly all the remaining funds it had raised, according to an investor who had been briefed by the company.”
“The issues at Nestcoin are the latest sign of the broad scale of the damage caused by the crisis at FTX, which was valued at $32bn and seen as one of the most regulation-friendly companies in an industry described by Wall Street’s top regulator as the ‘wild west’.”
“FTX and Alameda Research invested in other African start-ups over the past year. Chipper Cash, a Kenyan-based remittance company, raised $150mn last year at a $2bn valuation led by FTX and unnamed investors. Mara, another Kenyan crypto start-up, raised $23mn from Alameda, Coinbase and others. Mara said in May that it would become the ‘official crypto partner’ of the Central African Republic, the small conflict-plagued nation of 5mn that adopted Bitcoin as legal tender earlier this year.” Aanu Adeoye reports.
Indonesia Secures $20 Billion in Support for Net Zero Push
Nikkei Asia
“Indonesia has obtained at least $20 billion in funding commitments from developed nations led by the United States and Japan to speed up its clean energy transition and move forward its net zero carbon pledge by 10 years.”
“All members of the Group of Seven advanced economies plus Denmark and Norway, on Tuesday launched the Just Energy Transition Partnership (JETP) specifically for the Southeast Asian country. They intend to mobilize an initial $20 billion in public and private financing over the next three to five years to help it significantly reduce its greenhouse gas emissions.”
"‘It is arguably the single largest country-specific climate investment partnership ever,’ John Morton, climate counselor to the U.S. treasury secretary, told a news conference on the JETP launch held on the first day of the Group of 20 summit of advanced and emerging economies on the Indonesian island of Bali. Indonesia currently holds the G-20 presidency.”
"‘Over the next six months, we will work with Indonesia to develop a comprehensive investment plan’ on the JETP, Morton said….JETP also seeks to accelerate deployment of renewable energy so it will make up 34% of Indonesia's total power generation by 2030, up from the current 11%. That would ‘roughly double the total renewables deployment over the course of this decade compared to current plan,’ according to a joint statement on the launch. Nikkei Asia reports.
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