Emerging Markets Monitor - November 29
Brazil Charts Oil Power Path, Argentina's Milei in Washington, COP-28 Chief Calls for 'Maximum Ambition', Saudi Arabia Offers Iran Investments, Asia's First Saudi ETF
The Top 5 Stories Shaping Emerging Markets from Global Media - November 29
Brazil Charts $100 Billion Path to Be a Global Oil Power
Wall Street Journal
“Brazil’s state-controlled oil company, Petrobras, announced it would invest $102 billion before the end of 2028 as Latin America’s biggest nation positions itself to become one of the world’s major oil powers.”
“‘Someone has to produce oil, right?’ the company’s chief executive, Jean Paul Prates, said in an interview. The investment plan, unveiled late Thursday by Prates, is 31% more than the $78 billion Petrobras had announced in its previous five-year plan for the 2023-2027 period. More than 70% of the outlay will be spent on production and exploration, the plan said.”
“As the world’s major economies invest heavily in clean energy, weaning themselves off fossil fuels, Brazil has thrown ever more money behind oil production, tapping deep water reserves off the coast of Rio de Janeiro and eyeing potentially vast new deposits near the mouth of the Amazon river.”
“…With output cuts by Saudi Arabia and Russia, Brazil is set to be one of the top three sources of global oil production growth this year, alongside the U.S. and Iran, according to the International Energy Agency, a Paris-based group of some of the world’s biggest energy users.”
“Brazil is already the world’s ninth biggest oil producer and Latin America’s largest by far. It posted record oil-and-gas production in September of 4.7 million barrels of oil equivalent a day, more than twice as much as Mexico. Of that, 3.7 million barrels was crude oil, equivalent to more than a quarter of U.S. production and 17% more than the same month a year earlier, according to oil regulator ANP.”
“…Between 2011 and 2016, under the Workers’ Party’s last stint in government, Petrobras lost about $30 billion after the government forced the company to fund gasoline and diesel subsidies to fight inflation. By 2015, Petrobras had become the most indebted oil major in the world, owing $130 billion to creditors.” Wall Street Journal reports.
Argentina’s Milei Seeks Foreign Policy, IMF Reset in Washington Trip
Reuters
“Argentina's president-elect Javier Milei met on Tuesday with top U.S. officials in Washington and his economic team huddled with IMF officers as he seeks to formulate a plan to reshape the country's foreign policy and lead its economy out of crisis.”
“Milei told reporters as he left the White House that his meeting had been ‘excellent.’ He had been scheduled to meet with national security adviser Jake Sullivan and Juan Gonzalez, the National Security Council's senior director for the Western Hemisphere.”
“Milei, a far-right libertarian who takes office on Dec. 10, won election this month pledging radical reforms such as dollarization and ‘shock’ austerity to fix Argentina's economy. Inflation is near 150%, foreign currency reserves are in the red and a recession is looming.”
“His foreign policy, meanwhile, is unabashedly pro-United States and pro-Israel, with a cooler stance on top trade partners Brazil and China. ‘Milei is a unicorn, the leader of a major Latin American economy who is ostentatiously pro-American,’ said Benjamin Gedan, director of the Latin America program at Washington-based think-tank the Wilson Center.”
“While Milei's incoming team has looked to moderate earlier criticism of China and Brazil's leftist government, the U.S. trip ahead of his inauguration underscores his priorities.”
“He has also pledged not to join the China-led BRICS trade group. That's a sharp change in approach from outgoing center-left President Alberto Fernandez, who visited Moscow as Vladimir Putin was readying his invasion of Ukraine in February last year and recently returned from a visit to Beijing.”
“Argentina is by far the largest global debtor to the Washington-based lender but its program has ran off the tracks, and the IMF has been losing patience. The program is used mostly to pay the Fund back for a failed $57 billion program from 2018.”
“During his campaign Milei vowed to dollarize South America's second-largest economy, though he seems to have put that on the back burner while he looks to overturn a deep fiscal deficit and tamp down inflation. He has stuck, however, to pledges that he will radically change the mandate of the central bank.”
Reuters reports.
COP-28 President Designate Calls for “Maximum Ambition” As Climate Talks Begin
The National
“The Cop28 President-designate said the UAE was ready to welcome the world in the next 24 hours – and issued a call to action to tackle climate change together. Speaking to the media at Expo City Dubai on Wednesday, Dr Sultan Al Jaber, who is also Minister of Industry and Advanced Technology, said world leaders must come to Dubai ready to commit for the key summit that starts on Thursday.”
“‘We must raise the maximum ambition possible,’ he said. He urged decision-makers to bring a ‘supercharged mindset that is centred around implementation’, eight years after world leaders met in Paris to agree to keep post-industrial temperature increases to 1.5°C.”
“The latest evidence from the UN's top climate body – the Intergovernmental Panel on Climate Change – shows the world is way off target, he said. ‘We respect the science … and we respect the fact that the IPCC clearly shows that the progress we've made collectively so far is nowhere near fast enough,’ Dr Al Jaber said.”
“…Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, which runs the Cop talks, said: ‘This Cop – Cop28 – must be a turning point. This is where we shift from what needs to be done, to the how.And this how will be reflected in the global stocktake. How robust will that response be?’”
“Getting firm commitments to financing climate change mitigation – billions, if not trillions are needed – was crucial, Mr Stiell said. ‘Finance is the enabler for closing that implementation gap,’ he said. ‘Cop28 will be a finance Cop.’” The National reports.
Saudi Arabia Offers Iran Investment to Limit Israel-Hamas War
Bloomberg
“Saudi Arabia has approached Iran with an offer to boost cooperation and invest in its sanctions-stricken economy if the Islamic Republic stops its regional proxies from turning the Israel-Hamas war into a wider conflict.”
“The proposal has been delivered directly and through multiple means since Hamas’s attack on Israel last month and the ensuing war in Gaza, according to Arab and Western officials familiar with the matter.”
“The possibility of a deeper engagement also came up in the encounter between Iranian President Ebrahim Raisi and Saudi Crown Prince Mohammed Bin Salman during a summit in Riyadh this month to address the war, said the people, speaking on condition of anonymity to discuss the sensitive talks. Raisi was among the first leaders that MBS, as the crown prince is known, spoke with after the Hamas attack.”
“…While its unclear how seriously Tehran has taken Riyadh’s overtures, so far a regional war’s been averted. The Saudis and their Arab allies still fear such an outcome’s possible if Israel presses ahead with its military campaign to eradicate Hamas, which Israeli Prime Minister Benjamin Netanyahu has vowed to resume after a truce that’s led to hostage releases ends.”
“…Saudi Arabia’s two-pronged approach is giving a rare glimpse into its strategy vis-a-vis Iran after the restoration of diplomatic ties in March following a seven-year rupture. The two countries have long vied to be the main geopolitical power in the Middle East. The rivalry’s spurred in part by Iranian leaders’ eagerness to export their Islamic revolution to the rest of the region as well as their past rejection of the House of Saud’s guardianship over Islam’s holiest sites in Saudi Arabia.” Sam Dagher reports.
Asia’s First Saudi Arabia ETF Makes Winning Debut in Hong Kong
South China Morning Post
“CSOP Saudi Arabia ETF, the first exchange-traded fund in Asia that tracks the Middle East’s biggest companies including Saudi Aramco, made a winning debut in Hong Kong in a milestone listing underpinning stronger ties between Hong Kong and Middle East financial markets.”
“The Saudi ETF, managed by CSOP Asset Management, rose by 0.8 per cent to HK$77.56 per board lot of 10 units in Hong Kong on Wednesday, and by 0.3 per cent to 70.88 yuan. They trade under the 2830 and 82830 stock codes, respectively. In comparison, the Hang Seng Index fell 2 per cent on Wednesday.”
“‘The listing shows the formation of a partnership between the Middle East and Hong Kong and mainland China as well,’ said Rajeev Mittal, managing director for Asia-Pacific ex-Japan at Fidelity International. ‘There is a strong commonality of interest in the two regions.’”
“…Al-Humied said the launch of the Saudi ETF is ‘a significant milestone’ for the Saudi sovereign wealth fund to deepen cross-geography partnerships. PIF is an anchor investor in the ETF. ‘This will unlock unprecedented opportunities between the key capital market hub of Hong Kong and the Saudi equity market, one of the most attractive destinations for capital inflows in the world today,’ he said at the listing ceremony.”
“Never let the fear of striking out keep you from playing the game.” -Babe Ruth
this was hypocrisy leaders lineup week !
argentina and saudi are well-publicized, but the petrobras CEO not realizing he is paraphrasing the oldest maxim in the the history of illegal drug dealers :
'Someone else will sell them, right?’