Emerging Market Links + The Week Ahead (January 9, 2023)
Posted June 6, 2023 by Comments
For the first week of the year, many key money managers remain bullish on China while the Indian market has witnessed some outflows due to valuation concerns and opportunities in other EMs.
Otherwise, the other interesting investing related piece I came across noted how the VanEck Emerging Markets Equity Investment Team hadrecently visited Saudi Arabia where economic and social reforms could present an interesting investment opportunity. However and while the Saudis and GCC countries are looking at doing petro-yuan deals with China, don’t expect the former to de-peg the riyal from the dollar any time soon.
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Stay overweight on China stocks to capture upside momentum as UBS, Deutsche Bank back economic outlook (SCMP)
- Policy support is seen as a key driver to current upside momentum, chief EM strategist at Alpine Macro says
- “We expect Chinese growth to surprise to the upside. This, together with depressed valuations and weak earnings expectations, makes a compelling case for Chinese stocks.”
- Among other Asian markets, the research firm raised its allocation on Malaysia, the Philippines, South Korea and Thailand, and downgraded Indonesia.
- Alpine Macro noted that all self-imposed growth restrictions, such as the zero-Covid policy, the crackdown on the real estate sector and regulatory scrutiny of tech firms, have been removed. Odds of another flip-flop are low, given the damage to policy credibility,” it added.
- Money managers at UBS, Deutsche Bank back assessment, counting on Beijing’s zero-Covid pivot to deliver stronger economic growth
Why We Shouldn’t Underestimate China’s Petro-Yuan Ambitions (Oilprice.com)
- In a note to clients carried by the Irish Times, [Credit Suisse’s Zoltan] Pozsar warns: “China wants to rewrite the rules of the global energy market”, and it will do it by first removing the dollar from the orbit of the Bric countries (Brazil, Russia, India, China) that have been affected by the “weaponization” of dollar foreign exchange reserves meant to punish Russia and keep Putin from filling his wartime coffers. What’s happened here is a window of enormous opportunity for Beijing, which has now told the Gulf countries that they are absolutely guaranteed buyers for oil and gas, for payment in yuan, with Xi promising to “import crude oil [and natural gas] in a consistent manner and in large quantities from the GCC”.
- What Western minds are banking on–quite literally–is the fact that China alone has $1T in U.S. Treasury bonds. And as for the Saudis, they are truly tied to the Western financial system and the petrodollar. De-pegging the riyal from the dollar, though it has been discussed very quietly (only from a purely research perspective), would be a rather dramatic shock for the Kingdom–one the Crown Prince won’t likely be willing to risk for a very long time. But he will actively discuss oil deals with China in yuan. The Chinese goal is much more patient than any Western mind can fathom. It’s about slowly chipping away at the dollar’s throne in oil and commodities markets, and as the reserve currency of choice. That is what Brics and the Shanghai Cooperation Organization (SCO) is all about.
Foreign investors continue selling spree of 2022 into the new year (CNBCTV8 India)
- The Indian market has witnessed some outflows due to valuation concerns and other attractive opportunities being presented within the Emerging Market basket. [Rupen Rajguru of Julius Baer] Rajguru believes that global investors may turn bullish on China simply because of the undervaluation. However, India will also be a beneficiary, in case flows return to Emerging Markets.
- [Timothy Moe of Goldman Sachs] He was of the opinion that although India’s long-term strategic prospects are the best, if not among the best, 2023 will be a challenging year for investors looking for outsized profits.Moe finds valuations in China and South Korea to be more compelling. China trades at 10 times forward earnings, with headroom for faster earnings growth as well.
- On the other hand, Nilesh Shetty of Quantum Advisors believes that India will get a lot more flows as global investors, who allocated to China, do not want to allocate more due to political developments there. As a result, the only other emerging market where flows can come is India. “The way India is positioned globally, relative to the rest of the EMs, which are going through some of your own problems, makes a very sharp case for more flows coming into India internationally,” he said on CNBC-TV18.
Saudi Arabia: A Rising Investment Destination (VanEck)
- Following a recent trip to Saudi Arabia, the VanEck Emerging Markets Equity Investment Team came away feeling positive on the outlook and investment case for the country. This was driven by economic and social reforms amid the country’s transition to a more open society as well as infrastructure development coupled with the positive steps towards opening up the economy to foreign investors. We share our key takeaways from the trip in this blog.
- …though we remain cautious on the punchy valuations the market currently offers. Our visit confirmed that Saudi Arabia’s “Vision 2030” program has moved from being just an ambitious hope to a guiding framework that is being implemented through different realization programs and focus sectors with emphasis on long term investments.
Emerging Markets Debt: Springtime in January? (Barings)
- An economic rebound in 2024 is likely to follow, suggesting mid-2023 may be the optimal investment entry point in select EM sovereign and corporate credits
- In hardest-hit Eastern Europe, we believe investment grade sovereigns, including Croatia, Hungary, Poland, and Romania, are well underway in terms of adjusting to the energy and food price shocks— helped along the way by the EU Cohesion and Recovery funds.
- In Latin America, Brazil and Mexico have maintained strong fiscal policies since the initial COVID shock of 2020. As a result, their balance of payments are sustainable, and reliance on foreign savings minimal.
- Asia’s energy importers, including India, Indonesia, the Philippines and Thailand have been hit hard, but virtually all of them remain solid investment grade credits with capacity to adjust further and maintain well-deserved access to both local and global financial markets. Additionally, these countries now face upside amid China’s re-opening, including from China’s residents traveling abroad.
Note: Investing.com has a full calendar for most global stock exchanges BUT you may need an Investing.com account, then hit “Filter,” and select the countries you wish to see company earnings from. Otherwise, purple (below) are upcoming earnings for US listed international stocks (Finviz.com):
Click here for the full weekly calendar from Investing.com containing frontier and emerging market economic events or releases (my filter excludes USA, Canada, EU, Australia & NZ).
Frontier and emerging market highlights (from IFES’s Election Guide calendar):
Benin Beninese National Assembly Jan 8 2023 (d) Confirmed Apr 28, 2019
- Czechia President Jan 13, 2023 (d) Confirmed Jan 26, 2018
- Kazakhstan Kazakh Senate Jan 14, 2023 (t) Confirmed Oct 1, 2014
- Slovakia Referendum Jan 21, 2023 (t) Confirmed Feb 7, 2015
- Cyprus President Feb 5, 2023 (d) Confirmed Feb 4, 2018
- Ecuador Referendum Feb 5, 2023 (t) Confirmed Feb 4, 2018
- Nigeria Nigerian House of Representatives Feb 25, 2023 (d) Confirmed Feb 23, 2019
- Nigeria Nigerian Senate Feb 25, 2023 (d) Confirmed Feb 23, 2019
- Nigeria President Feb 25, 2023 (d) Confirmed Feb 23, 2019
- Djibouti Djiboutian National Assembly Feb 28, 2023 (t) Date not confirmed Feb 23, 2018
- Estonia Estonian Parliament Mar 5, 2023 (d) Confirmed Mar 3, 2019
- Turkmenistan Turkmen National Assembly Mar 31, 2023 (t) Date not confirmed Mar 25, 2018
Frontier and emerging market highlights from IPOScoop.com and Investing.com (NOTE: For the latter, you need to go to Filter and “Select All” countries to see IPOs on non-USA exchanges):
Atlas Lithium Corp.ATLX, 0.7M Shares, $8.00-10.00, $5.9 mil, 1/10/2023 Tuesday
- (Note: This is NOT an IPO. This is a NASDAQ uplisting from the OTC Market. On Nov. 15, 2022, the last reported sale price for our common stock was $13.125 per share, reflecting an expected common stock reverse split at a ratio of 1-for-750 to be effected prior to the closing of the Underwritten Offering.) Atlas Lithium Corp., formerly known as Brazil Minerals, is a U.S. mineral exploration and mining company with lithium projects and properties in other critical battery metals to power the Green Energy Revolution – nickel, rare earths, graphite and titanium. (Incorporated in Nevada)Our current focus is on developing our hard-rock lithium project located in Minas Gerais state in Brazil at a well-known premier pegmatitic district in Brazil. We intend to produce and sell lithium concentrate, a key ingredient for battery supply chain. Lithium is essential for batteries in electric vehicles and demand is expected to outstrip supply.As reported in our Form 10-Q for the period ended September 30, 2022, we have been approached, in an unsolicited manner, by two large companies seeking to secure lithium supply. Recently, one of such companies has provided us with a preliminary, written non-binding proposal for the right to acquire, at a reasonable discount to the then prevailing market prices, part of our planned production in exchange for providing capital towards the construction of our lithium concentration plant. There can be no assurance, however, that these discussions or proposals will result in any binding agreements.All of our mineral projects and properties are located in Brazil and, as of the date of this prospectus, our mineral rights portfolio for battery metals includes approximately 72,344 acres (293 km2) for lithium in 59 mineral rights, 54,950 acres for nickel (222 km2) in 15 mineral rights, 30,054 acres (122 km2) for rare earths in seven mineral rights, 22,050 acres (89 km2) for titanium in seven mineral rights, and 13,766 acres (56 km2) for graphite in three mineral rights. We believe that we hold the largest portfolio of lithium mineral exploration properties in Brazil, a premier and well-established jurisdiction for hard-rock lithium. We also believe that we are among the largest holders by size and breadth in exploration projects for other critical and battery metals among publicly traded companies.We are primarily focused on advancing and developing our hard-rock lithium project located in the state of Minas Gerais, Brazil, where some of our high-potential mineral rights are adjacent to or near large lithium deposits that belong to a competitor, a Nasdaq listed company. Our Minas Gerais Lithium Project is our largest endeavor and consists of 52 mineral rights spread over 56,078 acres (227 km2) and predominantly located within the Brazilian Eastern Pegmatitic Province which has been surveyed by the Brazilian Geological Survey and is known for the presence of hard rock formations known as pegmatites which contain lithium-bearing minerals such as spodumene and petalite. Generally, lithium derived from pegmatites is less costly to purify for uses in high technology applications than lithium obtained from brine. Such applications include the battery supply chain for electric vehicles (“EVs”), an area of expected high growth for the next several decades.We believe that we can materially increase our value by the acceleration of our exploratory work and quantification of our lithium mineralization. Our initial commercial goal is to be able to enter production of lithium-bearing concentrate, a product which is highly sought after in the battery supply chain for EVs.
MGO Global Inc.MGOL, 1.5M Shares, $5.00-5.00, $7.5 mil, 1/13/2023 Friday
- We are a global lifestyle and fashion brand with a license agreement with soccer legend Lionel Messi, also known as Leo Messi. (Incorporated in Delaware)The Messi Brand design team is led by MGO co-founder and Chief Design Officer Virginia “Ginny” Hilfiger, who works in close collaboration with Leo Messi to craft the fundamental design aesthetic that has continued to inform and inspire the development of each year’s casual, but elegant spring and fall collections. Two of the brand’s signature design elements, the color palette and the incorporation of “10” and “30,” are nods to Messi’s soccer teams – the color palette is largely composed of his teams’ colors, light blue, navy blue, white and red, the “10” is his jersey number both in Barcelona and the Argentinian national team, and the “30” is his jersey number for Paris Saint Germain.We signed a global licensing agreement in October 2018, which was later replaced by the Messi License, with legendary pro soccer player Lionel Messi, also known as Leo Messi, or Messi, to spearhead the creation of “The Messi Brand” – a premium line of functional and sporty casual wear, accessories and home décor that is inspired by the superstar’s persona and trend-setting fashion sense – both on and off the pitch. This license agreement was later terminated and replaced by another licensing agreement with similar terms which are described under “Business—The Messi License Agreement.” The resulting in-demand collections contain designs focused on being effortless and accessible to all, much like that of Messi’s personal style. (Example: The M10 Rugby Long Sleeve Shirt sells for $85.00, according to The Messi Store online.)While The Messi Brand represents the first and only asset in our portfolio, our business model is underpinned by our intent to strategically expand our collection of lifestyle brands through industry collaborations, licensing, acquisitions and organic brand development. However we are not currently in active discussions with any third parties relating to potential collaborations, licensing or acquisitions to expand our brand portfolio. While it is our intention to pursue growth and expansion of our brand portfolio in the future, we currently are not negotiating or have any probable agreements to add additional assets to the Messi Brand in our portfolio at this time.Members of our leadership team have led prolific brand development initiatives for fashion industry titans that have included Tommy Hilfiger, Fila, Burberry, J Brand, GUESS, Brooks Brothers and True Religion, among many others, collectively generating billions of dollars in retail sales across the globe over the past 30 years.
Climate change and ESG are clearly the latest flavours of the month for most new ETFs. Nevertheless, here are some new frontier and emerging market focused ETFs:
- 9/22/2022 – WisdomTree Emerging Markets ex-China Fund XC – Passive, equity, emerging markets
- 9/15/2022 – KraneShares S&P Pan Asia Dividend Aristocrats Index ETF KDIV – Passive, equity, Asia, dividend strategy
- 9/15/2022 – OneAscent Emerging Markets ETF OAEM – Active, Equity, emerging markets, ESG
- 9/9/2022 – Emerge EMPWR Sustainable Select Growth Equity ETF EMGC – Active, equity, emerging markets
- 9/9/2022 – Emerge EMPWR Unified Sustainable Equity ETF EMPW – Active, equity, emerging markets
- 9/8/2022 – Emerge EMPWR Sustainable Emerging Markets Equity ETF EMCH – Active, equity, emerging markets, ESG
- 7/14/2022 – Matthews China Active ETF MCH – Active, equity, China
- 7/14/2022 – Matthews Emerging Markets Equity Active ETF MEM – Active, equity, emerging markets
- 7/14/2022 – Matthews Asia Innovators Active ETF MINV – Active, equity, Asia
- 6/30/2022 – BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF XEMD – Passive, fixed income, emerging markets
- 5/2/2022 – AXS Short CSI China Internet ETF SWEB – Active, inverse, thematic
- 4/27/2022 – Dimensional Emerging Markets High Profitability ETF DEHP – Active, equity, emerging markets
- 4/27/2022 – Dimensional Emerging Markets Core Equity 2 ETF DFEM – Active, equity, emerging markets
- 4/27/2022 – Dimensional Emerging Markets Value ETF DFEV – Active, equity, emerging markets
- 4/27/2022 – iShares Emergent Food and AgTech Multisector ETF IVEG – Passive, equity, thematic [Mostly developed markets]
- 4/21/2022 – FlexShares ESG & Climate Emerging Markets Core Index Fund FEEM – Passive, equity, ESG
- 4/6/2022 – India Internet & Ecommerce ETF INQQ – Passive, equity, thematic
- 2/17/2022 – VanEck Digital India ETF DGIN – Passive, India market, thematic
- 2/17/2022 – Goldman Sachs Access Emerging Markets USD Bond ETF GEMD – Passive, fixed income, emerging markets
- 1/27/2022 – iShares MSCI China Multisector Tech ETF TCHI – Passive, China, technology
- 1/11/2022 – Simplify Emerging Markets PLUS Downside Convexity ETF EMGD – Active, equity, options strategy
- 1/11/2022 – SPDR Bloomberg SASB Emerging Markets ESG Select ETF REMG – Passive, equity, ESG
Frontier and emerging market highlights:
- 12/28/2022 – Franklin FTSE Russia ETF – FLRU
- 12/22/2022 – VictoryShares Emerging Market High Div Volatility Wtd ETF CEY
- 8/22/2022 – iShares MSCI Argentina and Global Exposure ETF AGT
- 8/22/2022 – iShares MSCI Colombia ETFI COL
- 6/10/2022 – Infusive Compounding Global Equities ETF JOYY
- 5/3/2022 – ProShares Short Term USD Emerging Markets Bond ETF EMSH
- 4/7/2022 – DeltaShares S&P EM 100 & Managed Risk ETF DMRE
- 3/11/2022 – Direxion Daily Russia Bull 2X Shares RUSL
- 1/27/2022 – Legg Mason Global Infrastructure ETF INFR
- 1/14/2022 – Direxion Daily Latin America Bull 2X Shares LBJ
Check out our emerging market ETF lists, ADR lists (updated) and closed-end fund (updated) lists (also see our site map + list update status as some ETF lists are still being updated as of Summer 2022).
I have changed the front page of www.emergingmarketskeptic.com to mainly consist of links to other emerging market newspapers, investment firms, newsletters, blogs, podcasts and other helpful emerging market investing resources. The top menu includes links to other resources as well as a link to a general EM investing tips / advice feed e.g. links to specific and useful articles for EM investors.
Disclaimer. The information and views contained on this website and newsletter is provided for informational purposes only and does not constitute investment advice and/or a recommendation. Your use of any content is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the content. Seek a duly licensed professional for any investment advice. I may have positions in the investments covered. This is not a recommendation to buy or sell any investment mentioned.
Emerging Market Links + The Week Ahead (January 9, 2023) was also published on our Substack.
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