Emerging Markets Monitor - Sept. 14
EM Leads Crypto Adoption, Chinese Investment in Mexico, 'Tollywood' Rising, Inflation Stalks U.S Economy, Mubadala Raises Burger King Brazil Bid
The Top 5 Stories Shaping Emerging Markets from Global Media - Sept. 14
Emerging Markets Top Crypto Adoption Index
Coin Telegraph
“While global adoption slowed down because of the chilling winds brought about by the crypto winter, emerging markets seem to be on fire in terms of crypto adoption as they surpass higher-income countries in an index that measures adoption.”
“In a report titled The 2022 Global Crypto Adoption Index, blockchain data platform Chainalysis analyzed the millions of crypto transactions worldwide, web traffic and other on-chain metrics to determine which countries are on top in terms of cryptocurrency adoption.”
“The results show that in terms of crypto adoption, emerging markets are at the forefront. According to the data, lower-middle-income countries like Vietnam, Philippines, Ukraine, India, Pakistan, Nigeria, Morocco, Nepal, Kenya and Indonesia hold positions in the top 20 countries in terms of overall index score, with Vietnam holding the number one spot.”
“Upper-middle-income countries like Brazil, Thailand, Russia, China, Turkey, Argentina, Colombia and Ecuador have also made it into the list while the United States and the United Kingdom are the only representatives of high-income countries within the index.”
“Apart from the adoption rankings, the report also showed that even though adoption became slower amid the bear market, adoption levels are still higher than what the industry witnessed before the bull run of 2020.” Ezra Reguerra reports.
Chinese Firms Skip Over U.S Tariffs By Investing in Mexico
Bloomberg
“Chinese manufacturers looking to sidestep US tariffs and shorten pandemic-ravaged supply chains have found the perfect solution: Mexico.”
“Plants and warehouses are sprouting up south of the border as companies take advantage to proximity to the world’s biggest consumer market. ‘If you want to do good business with America, you must have something close to the market,’ says Simon Huang, country manager for Kuka Home, a Chinese furniture manufacturer with operations at Hofusan Industrial Park that’s located in a prime spot between Mexico’s industrial capital and the US border.”
“That isn’t Mexico’s only selling point. Thanks to the country’s free-trade pact with the US and Canada, a chair made at Kuka’s factory in Hofusan can travel across the border duty-free, whereas one shipped to the US from China would be hit with a 25% tariff, according to Huang.”
“Chinese investment in Mexico jumped from $154 million in 2016 to $271 million the following year, when Donald Trump took office threatening a trade war. The pandemic’s supply-chain snarls and the angst caused by Chinese President Xi Jinping’s tech crackdown have catapulted yet more Chinese companies across the Pacific, with investment in Mexico hitting just under $500 million last year.” Bloomberg reports.
Move Over, Bollywood. Hello, Tollywood.
Wall Street Journal
“…India is known for its Bollywood movie industry featuring Hindi-speaking actors who dance and sing their way through over-the-top romantic extravaganzas. That nickname is a portmanteau of Bombay, a center of filmmaking that is now called Mumbai, and Hollywood.”
“But nearly 60% of Indians don’t count Hindi as their primary language—and this huge audience has sparked the enormous growth of ‘Tollywood,’ a competing industry of South Indian films and television shows that derives its name from its use of Telugu, one of the region’s major languages.”
“Tollywood devotees are thrilled to have big-budget, swaggering blockbusters in their mother tongue. The genre has also inspired a level of hero worship some observers describe as simply bonkers.”
“Movies made in the Telugu-language studios of Tollywood, centered in the southern city of Hyderabad, and in the Tamil langud with 27% for Hindi-language flicks in 2020 and 2021, according to consulting firm Ormax Media. Major streaming platforms, such as Amazon.com and Netflix, are scrambling to capitalize on the booming audience by investing in television shows in South Indian languages.” WSJ reports.
Rising Inflation Sparks Fear of Hard Landing for U.S Economy
Financial Times
“Hopes that the Federal Reserve can engineer a soft landing for the US economy took a hit on Tuesday when a crucial measure of inflation came in higher than forecast and triggered a sharp sell-off on Wall Street.”
“The consumer price index increased 0.1 per cent for August, above economists’ expectations for a 0.1 per cent drop. Most worryingly for policymakers, core inflation — which strips out volatile items like energy and food — rose by 0.6 per cent for an annual increase of 6.3 per cent, compared with 5.9 per cent recorded for July.”
“The figures from the Bureau of Labor Statistics brought an end to a brief respite for Fed officials after July’s reading showed that prices had not risen compared with the prior month.”
“Wall Street was caught off guard by the hotter-than-expected inflation figures. The S&P 500 closed down 4.3 per cent, the worst performance since June 2020. The Nasdaq Composite, which is stacked with technology companies that are more sensitive to changes in interest rate expectations, ended Tuesday more than 5 per cent lower.”
“Steven Blitz, chief US economist at TS Lombard, said Tuesday’s data combined with rising wages and a tight labour market meant the Fed was ‘not going to produce the soft-landing fairy tale’… ‘We don’t really see anything in here that would make the Fed want to opt for a slower pace of rate hikes this month,’ said Brian Coulton, chief economist at Fitch Ratings. The FT reports.
Mubadala Raises Bid to Acquire Brazil Burger King Operator
Arabian Business
“Abu Dhabi capital market company Mubadala Capital, raised the price of a tender offer to acquire control of the company, Zamp, to 1.03 billion Brazilian real ($200.91 million).”
“A tender offer is an open offer by an investor, who proposes buying shares from every shareholder of a publicly traded company for a specific price, during a specific time.”
“Zamp, is met with a new offer for 8.31 reais ($1.62) per share, according to Reuters. Mubadala had previously bid for 7.55 reais per share, however, it was rejected by shareholders.”
“Mubadala already owns 5 percent shares in the Brazilian company, which also owns the Popeyes fast food franchise. ‘The figure represents a 34 percent premium over the closing price of Zamp’s shares on July 29, the last trading session before the announcement of the offer,’ Reuters said, adding the Brazilian company’s shareholders will decide if stakes will be sold or not, in another tender scheduled for September 26.”
“Zamp was formerly known as BK Brasil Operacao e Assessoria a Restaurantes S.A. and has over 800 Burger King outlets in Brazil. Burger King Brasil acquired Domino’s Brasil, another giant in the Brazilian fast food market, from Vinci Partners Investments in 2021.” Arabian Business reports.
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