Emerging Markets Monitor - November 22
Turkey Stocks Sizzle, West Agrees on Russia Oil Price Cap, China Lockdowns Bite, Mukesh Ambani Super Bullish on India, UAE Economy Hits 6% Growth in '22
The Top 5 Stories Shaping Emerging Markets from Global Media - November 22
Turkey Stock Market Sizzles, Gaining 80% On The Year
Bloomberg
“In a year when most of the world’s stock markets are flagging, Turkey’s is an outlier.”
“The country’s stock market has soared to a record high in 2022 as domestic retail investors seek a refuge from runaway inflation. The benchmark Borsa Istanbul 100 Index is up 80% in dollar terms this year. In lira terms, the index is up more than 150%, its best performance since 1999.”
“‘Stocks will most probably continue to be favored for at least the first half of next year, even as inflation starts easing,’ said Evren Kirikoglu, founder of Istanbul-based Sardis Research Consultancy. ‘The government is likely to maintain low interest rates and keep the currency under control until the elections around June.’”
“Domestic investors are piling into stocks as Turkey’s central bank pursues unconventional policies of cutting interest rates to boost growth even as inflation rates were more than 80%. Monetary easing cycles that took place in 2021, which runs counter to most global central banks’ stance, have led the lira to plunge and turned stocks into one of few havens that yield returns. The currency’s recent narrow trading range has also led to diminished interest in the government’s FX-indexed lira deposit accounts, sending domestic investors to look for alternative assets.”
“Foreigners are still negative on Turkey: after billions of dollars of outflows, they now own a record low of 29% of the stock market. But short positions on Turkey’s largest exchange-traded fund fell last month to their lowest in almost nine years, showing that as local investors drive the market up, overseas investors aren’t betting against the market.”
“…The BIST 100 Index is trading at a 5.3 times forward price-to-earnings multiple. In contrast, the MSCI Emerging Markets Index is at 11.1 times.” Bloomberg reports.
Western Allies Agree on Russia Oil Price Cap Wednesday
Wall Street Journal
“The U.S. and its allies are seeking to agree on a level for a price cap on Russian oil as soon as Wednesday, with officials discussing setting it at around $60 a barrel as the group rushes to put the plan into place before Dec. 5, according to people familiar with the talks.”
“The price cap, which the people said could still be set as high as $70, is at the center of the West’s efforts to sanction Russia for its invasion of Ukraine. The untested sanctions design is set to begin on Dec. 5 after facing delays this fall, as the Group of Seven advanced democracies has struggled to iron out the final details of the complicated plan.”
“Ambassadors from the 27 European Union member states are scheduled to meet Wednesday, when they will try to come to an agreement on a price. The bloc must agree on the price cap unanimously and diplomats warned that may prove difficult. The G-7 is aiming to approve the cap in sync with the EU.”
“The aim of the plan, which was pushed hard by Treasury Secretary Janet Yellen, is to crimp Russian energy exports revenue while avoiding a surge in oil prices when a European embargo on Russian oil imports kicks in early next month. Despite European reluctance at the time, the G-7 first agreed on setting the oil price cap in June following Russia’s Feb. 24 invasion of Ukraine.”
China Lockdowns Hit Record Levels as Coronavirus Cases Soar
Financial Times
“Covid-19 cases in China are spiralling towards record highs, forcing officials to again lock down large swaths of the country. The world’s second-biggest economy reported almost 28,000 new Covid cases on Tuesday, with outbreaks in Beijing, the southern manufacturing hub of Guangzhou and the southwestern metropolis of Chongqing continuing to grow.”
“The country’s battle to suppress the virus has battered China’s economy, disrupting global supply chains and threatening world growth. Almost three years after Covid first hit the city of Wuhan, vaccination rates among vulnerable sections of China’s population lag those in many rich countries, while its continued use of lockdowns as a primary method of disease control has made it an international outlier.”
“Officials in Beijing shut most non-essential businesses in the city’s largest district, Chaoyang, which has a population of 3.4mn, and have closed restaurants and other entertainment venues in much of the city, while telling residents to work from home.”
“‘China is seeing a record level of lockdowns,’ said Ting Lu, chief China economist at Nomura. ‘It’s even a bit worse than during the [spring] Shanghai lockdown because so many cities are partially locked down.’ The bank estimates Covid restrictions have hit areas responsible for one-fifth of China’s gross domestic product.” The FT reports.
Mukesh Ambani Says Indian Economy To Grow 13-Fold to $40 Trillion By 2047
LiveMint
“The Indian economy is likely to grow 13 folds from its current size to become a $40-trillion economy by 2047 said Reliance Industries chairperson Mukesh Ambani on Tuesday. He said that this will be driven primarily by a clean energy revolution and digitalisation.”
“Mukesh Ambani's estimate for the country's economy, which currently is the fifth largest in the world only to the US, China, Japan and Germany, is more optimistic than Asia's richest man Gautam Adani, who last week stated that India will become a $30-trillion economy by 2050 on back of rising consumption and socio-economic reforms.”
“As the 'Amrit Kaal' -- the period between now and 2047 when India will be celebrating 100 years of independence -- unfolds, the country will witness an unprecedented explosion in economic growth and opportunities, he asserted.”
"‘Three game-changing revolutions will govern India's growth in the decades ahead,’ he said. ‘The clean energy revolution, the bio-energy revolution and the digital revolution.’” LiveMint reports.
UAE Economy to Grow 6% in 2022, IMF Says
The National
“The UAE economy is set to grow by more than 6 per cent this year, after expanding by 3.8 per cent in 2021, buttressed by a rebound in tourism, construction and activity related to the Expo 2020 Dubai, the International Monetary Fund has said.”
“An expansion of 6 per cent would be the highest since 2011, when the economy grew by 6.9 per cent. The UAE economy expanded by 8.4 per cent in the first quarter of this year, exceeding initial estimates, as a result of higher oil prices and successful Covid-19 mitigation measures.”
“‘Economic growth has been robust this year,’ said Ali Al-Eyd, who led the IMF team that met UAE authorities from November 2 to November 17. ‘Fiscal and external surpluses have increased further, benefitting from the higher oil prices, as well as the removal of the temporary Covid crisis-related fiscal support to businesses and households as the pandemic has gradually waned.’”
“The UAE's foreign trade for the first six months of this year exceeded Dh1 trillion ($272 billion), compared with Dh840 billion for the same period before the pandemic…Growth in the number of hotel guests climbed 42 per cent, compared with the same period before the pandemic.” Massoud A. Derhally reports.
World Cup Photo of the Day
Saudi striker Salem Aldowsari celebrates with a flip after scoring what turned out to be the game-winning goal, shocking the world and ending Argentina’s 36 match unbeaten streak.
World Cup Results So Far
November 22
Saudi Arabia 2, Argentina 1
Denmark 0, Tunisia 0
Mexico 0, Poland 0
France 4, Australia 1
November 21
England 6, Iran 2
Netherlands 2, Senegal 0
USA 1, Wales 1
November 20
Ecuador 2, Qatar 0
November 23 Matches
Morocco vs Croatia
Germany vs Japan
Spain vs Costa Rica
Belgium vs Canada
“Success is no accident. It is hard work, perseverance, learning, studying, sacrifice and most of all, love of what you are doing or learning to do.”
― Pele