This Week In Emerging Markets (Vol. III)
News, data, and curated content from across the globe.
Welcome to This Week In Emerging Markets, a weekly wire for topics in, from, and about emerging markets.
Sorry — Next longform piece out next week. I’ve been getting carried away with some programming projects.
Hopefully will be able to share some soon!
— Tom
Bloomberg: Huarong Bonds Drop After Report Regulators Consider Restructuring
The declines follow a three-day rally in the firm’s dollar bonds that accelerated Friday after China’s financial regulator said that the bad-debt manager was operating normally and had ample liquidity. The statement, made after a regular briefing in Beijing, were the first official comments since the company jolted Asian credit markets by missing a deadline to report preliminary earnings on March 31.
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A potential restructuring or default for China Huarong would be the nation’s most consequential since the late 1990s. Any signs that Beijing is rethinking its support for a central, state-owned firm like China Huarong would have deep repercussions for the broader dollar bond market. The company is majority owned by China’s Ministry of Finance and is deeply intertwined with the nation’s $54 trillion financial industry.
Financial Times: Xi warns against economic decoupling and calls for new world order
Xi did not name the US in his 18-minute speech but he took aim at Washington’s efforts to decouple supply chains and bar critical American semiconductors and other high-tech goods from being sold to Chinese companies such as Huawei.
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Despite the geopolitical tensions, US businesses are eager to expand operations in China, which posted 18.3 per cent year on year economic growth in the first three months of 2021. US banks in particular have been keen as Beijing gradually opens up its financial markets.
Western executives scheduled to participate in the Boao Forum included Apple chief executive Tim Cook, Goldman Sachs president John Waldron, Tesla boss Elon Musk and Stephen Schwarzman of Blackstone.
Indian Premiere League Standings
Royal Challengers Bangalore will face-off against the Chennai Super Kings this upcoming Sunday, April 25th.
The Economic Times: Flipkart likely to bag Cleartrip for $40 million in distress sale
Flipkart is finalising the acquisition of Cleartrip, one the oldest travel booking portals in India, two people in the know said, as the Walmart-owned online retailer continues to make strategic investments across sectors to strengthen its portfolio and build an ecosystem around it.
The Flipkart-Cleartrip deal, which will be a mix of cash and equity, is likely to value Cleartrip at around $40 million in what is considered to be a distress sale for the 15-year-old Mumbai firm amid the pain that the pandemic has inflicted on the travel and hospitality industry.
Riyadh Bureau: Saudi Arabia to localise all jobs in malls
Latest official data show that unemployment among Saudi citizens fell to 12.6% in the fourth quarter from 14.9% in the third quarter of 2020, returning to pre-pandemic levels as the government relaxed coronavirus restrictions and gradually allowed the resumption of economic activity.
Last year saw as many as 129,000 expatriates leaving the kingdom on final exit visas, while 74,000 Saudi men and women joined the workforce during the same period, according to figures released by the General Organization for Social Insurance.
Unemployment will continue to be the most difficult problem vexing the crown prince’s economic reform plans, and the aforementioned numbers are leaving many observers scratching their heads.
South China Morning Post: It’s Indonesia’s ‘Silicon Valley’, but has Algorithm Hill done the maths?
Creating a Silicon Valley-style tech hub is central to President Joko Widodo’s vision of ushering in a fourth industrial revolution built on advanced technology and human resources in time for 2045, when the country will celebrate 100 years of independence.
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“We are still seeing digital inequality in Indonesia. There is a gap between Jakarta and other areas, particularly in the eastern part of Indonesia. This shows that we need to allocate some of the resources to those areas so their productivity can increase, and Indonesia’s GDP per capita can rise,” said Cuaca of East Ventures.
Indonesia’s internet economy is the largest in Southeast Asia. Its value is projected to reach US$124 billion by 2025, up from US$44 billion last year, according to a joint report by Google, Temasek, and Bain & Co.
Twitter
Wall Street Journal: Germany’s Conservatives Select Chairman as Election Candidate
Ms. Merkel, one of the longest-serving democratic leaders of the postwar era, will bow out of politics after 16 years as chancellor in September.
Armin Laschet, chairman of Ms. Merkel’s Christian Democratic Union and state premier of North-Rhine Westphalia, will lead the bloc’s election bid.
Mr. Laschet has generally supported Ms. Merkel’s centrist, sometimes left-leaning, brand of conservatism. He has backed her liberal asylum policy and her championing of economic ties to China and Russia despite U.S. objections.
Ray Dalio’s Principled Perspectives: Why in the World Would You Own Bonds When…
Author’s Note: This post is from 3/15/21.
Consistent with this classic cycle there is now a shifting from US bonds to Chinese bonds going on. Chinese bond holdings held by international investors are rising fast, though they are now only about 6% of allocations in global portfolios. This shift is going on because
a) global investors are overweighted in US bonds and underweighted in Chinese bonds relative to sensible criteria of what weights should be based on sensible portfolio-weighting processes, such as the relative sizes of their economies, their relative shares of world trade, and the relative sizes of their capital markets,
b) Chinese bond and other capital markets investments are growing fast and are increasingly open to foreign investment,
c) Chinese bonds offer relatively attractive yields with relatively attractive currency returns because of China’s favorable balance of payments conditions, and
d) China’s currency is increasingly being internationalized.
The Week Ahead:
Sunday — 🇳🇿 🇦🇺 ANZAC Day, 🇪🇬 Egyptian Liberation Day;
Monday — 🇸🇬 Singapore, 🇮🇱 Israel Industrial Production; 🇫🇮 Finnish PPI; 🇵🇱 Polish, 🇮🇱 Israeli Unemployment; 🇲🇽 Mexican Economic Activity; 🇧🇷 Brazilian FDI; 🇰🇷 S. Korean GDP; 🇯🇵 Bank of Japan Interest Rate Decision;
Tuesday — 🇩🇰 Danish, 🇱🇹 Lithuanian, 🇯🇵 Japanese Retail Sales; 🇸🇪 Swedish Unemployment, PPI; 🇭🇺 Hungarian National Bank, 🇸🇪 Riksbanken, Interest Rate Decision; 🇧🇷 Brazilian, 🇦🇺 Australian CPI; 🇺🇸 U.S. New Home Sales; 🇲🇾 Malaysian Trade Balance;
Wednesday — 🇳🇴 Norway, 🇸🇪 Sweden, 🇮🇪 Ireland, 🇱🇻 Latvia, 🇨🇦 Canada Retail Sales; 🇭🇺 Hungarian Unemployment; 🇹🇭 Thailand Industrial Output, 🇦🇹 Austrian Manufacturing PMI, 🇳🇿 New Zealand Trade Balance; 🇺🇸 U.S. Federal Reserve Interest Rate Decision;
Thursday — 🇩🇰 Danish, 🇪🇸 Spanish, 🇩🇪 German, 🇯🇵 Japanese Unemployment; 🇸🇪 Swedish, 🇱🇻 Latvian, 🇺🇸 U.S., 🇧🇪 Belgian, GDP; 🇮🇹 Italian, 🇬🇷 Greek, 🇿🇦 South African, 🇦🇺 Australian PPI; 🇯🇵 Japanese, 🇨🇳 Chinese PMI; 🇮🇸 Iceland, 🇧🇪 Belgium, 🇩🇪 German, 🇯🇵 Japanese CPI, 🇧🇼 Botswana, 🇪🇬 Central Bank of Egypt Interest Rate Decision; 🇰🇷 S. Korean Industrial Output;
Friday — 🇫🇷 French,🇩🇪 German, 🇪🇸 Spanish, 🇦🇹 Austrian, 🇨🇿 Czech, 🇮🇹 Italian, 🇵🇹 Portuguese, 🇹🇼 Taiwanese, 🇱🇹 Lithuanian, 🇨🇦 Canadian GDP; 🇨🇭 Swiss, 🇪🇸 Spanish Retail Sales; 🇫🇷 French, 🇦🇹 Austrian, 🇭🇺 Hungarian PPI; 🇳🇴 Norwegian, 🇨🇱 Chilean, 🇨🇴 Colombian Unemployment; 🇮🇹 Italian CPI; 🇨🇴 Bank of the Republic Interest Rate Decision; 🇰🇷 S. Korean and 🇿🇦 South African Trade Balance