The collapse of Silicon Valley Bank is rippling throughout the world. These Zero Hedge articles, Record Bank Run Drained A Quarter, Or $42BN, Of SVB’s Deposits In Hours, Leaving It With Negative $1BN In Cash and “Expect Mass Layoffs…” – The Real-World Impact Of SVB’s Failure, detail many of the better known companies who have direct exposure to the bank while this file supposedly gives a complete list (including major funding vehicles for Chinese start-ups, China Renaissance and Sequoia Capital China).
SVB was among the first financial institutions to start serving China’s start-ups and there will be indirect spill over effects elsewhere e.g. tech start-ups funded by Silicon Valley in other emerging markets could face additional funding crunches in the coming months or year. Likewise, the collapse should serve as a warning to investors in other commercial banks and to be mindful of where emerging or frontier market stocks might have their cash deposits. However:
Meanwhile, in a recent panel discussion, Peter Costello who manages Australia’s sovereign wealth fund (Future Fund), says they are very carefully screening their Chinese stock portfolio as the Biden administration plans new curbs for Chinese technology firms. This comes as Chinese share sales in Europe gain importance as financing tool while China’s cities are struggling under trillions of dollars of debt.
Finally, at the end of this post, there is an updated list of emerging market ETFs that have either launched recently or they are being closed or liquidated. Invesco will be culling a total of 26 funds (including five emerging market ETFs). This is also not the first time in recent years they have done major revamps of funds with limited assets or investor interest.
$ = behind a paywall
- Chairman of Future Fund says screening portfolio as Biden administration plans new curbs for Chinese technology firms.
- “Is it foreseeable that something similar could happen in China [the experience of Western investments in Russia]? I think it’s foreseeable,” Costello said during a panel discussion at the Australian Financial Review business summit in Sydney on Tuesday.“And so we’ve gone through very, very carefully as many companies as we can to try and drop stocks. Have we found every company? No, because you don’t know of a lot of these Chinese companies.”
Here is a link to the Panel Discussion and the China comments start with a question around the 44 minute mark (mostly Australia relevant talk before that):
The big threats facing the economy (AFR) 51 Minutes
- ANU’s Heather Smith, Future Fund’s Peter Costello, BHP’s Mike Henry and economist Nouriel Roubini discuss the challenges and opportunities facing the world.
- ‘There is no change in the country’s policy on cross-border remittance of funds,’ the State Administration on Foreign Exchange (SAFE) said in a statement cited by CNBC.
- HSBC said it has not received any instructions from Chinese regulators to restrict outbound remittances, nor is it aware of any recent policy changes.
SVB’s debacle is causing panic in China’s startup industry (Tech Crunch) and Silicon Valley Bank’s Troubles Threaten a Key Bridge Between Chinese Startups and U.S. Investors (The Information) $
- Since its inception, the JV has since carved out a list of services, including onshore banking financial products and services in China, including liquidity solutions, trade financing, local and foreign currency deposits, wealth management, and foreign exchange settlement and sales services.
- Xi Jinping’s zero-Covid campaign saddled cities with billions of dollars in unplanned expenditures for mass testing and lockdowns. The Chinese leader’s crackdown on excessive property-market leverage led to a sharp drop in land sales, depriving cities of one of their biggest revenue sources.Two-thirds of local governments are now in danger of breaching unofficial debt thresholds set by Beijing to signify severe funding stress, with their outstanding debt exceeding 120% of income last year, S&P Global calculations show.About a third of China’s major cities are struggling to pay just the interest on debt they owe, according to a survey by Rhodium Group, a New York-based research firm. In one extreme case, in Lanzhou, the capital city of Gansu province, interest payments were the equivalent of 74% of fiscal revenue in 2021.
NOTE: Article is otherwise paywalled and I cannot find further info about who at UBS said this.
- Europe is becoming an increasingly important source of equity financing for publicly traded Chinese companies that tap into expanding China-Europe stock connect programs, an executive of global banking giant UBS said.
- In 2022, nine Chinese businesses raised a total of $3.2 billion by selling global depositary receipts (GDRs) on the SIX Swiss Exchange in Zurich, data from the bourse showed. That was seven times as much as Chinese companies generated through share sales in the U.S.
- While record levels of load shedding and weaker growth are weighing on sentiment, SA assets are offering value, says Ninety One portfolio manager Malcolm Charles.
- Bonds in particular are offering solid yields.
- A strong push to privatise power, lower inflation and a stronger global growth outlook could boost South Africa.
- Charles also believes that the generous tax incentive scheme for renewable energy installations – including that businesses will now be able to deduct 125% of the cost of projects in the first year – may be a game-changer, as was proved in Vietnam, after it adopted a similar scheme.
Emerging Market Stock Picks / Stock Research
$ = behind a paywall
- In C4Q22, JD reported in-line total revenue and beat in profit. We trimmed down our forecast on C1Q23 total revenue by 4% due to slower-than-expected rebound in retail spending.
- JD is shifting its strategy to be more focused on low price and user, and we suggest that the repositioning period could be painful for the company.
- We cut our revenue forecast by 5%. Our estimates on top and bottom lines in 2023 are (6%) and (28%) below cons. Maintain SELL rating and cut TP to US$27.
Swire Back To Buying Back – One-Third To Go (Smart Karma) $
- After two months of zero buybacks under their HK$4bn buyback programme, on Friday Swire Pacific (A) (19 HK) | Swire Pacific (B) (87 HK) again bought back shares.
- Ostensibly, it was as Swire A shares fell below HK$60/share. They were 65% of B volume and 51% of A volume on Friday – not shy about their return.
- Assuming participation patterns normalise and the shares don’t bounce back above the self-imposed limit, the buyback will probably last 6-7 weeks more. The div arb is real if you hold.
Also check out: Swire Pacific Limited: Another Hong Kong Based SWAN Stock (Seeking Alpha)
- Well-managed Swire Pacific has only a 19.5% gearing.
- Dividend back to pre-pandemic level with a 15% hike for 2022.
- Growth areas lie in property and beverages but its ROE could be dragged down from aviation and other business ventures.
- Mexico presents a generational opportunity for investors who want to capitalize on its emergence as the preferred destination for supply chain nearshoring.
- Given its strategic positioning, Union Pacific is poised to reap the benefits of manufacturing nearshoring to Mexico.
- Union Pacific has durable competitive advantages and resilience, even in uncertain times like today. The recent pullback has created an opportunity for investors, as my analysis demonstrates.
- At first sight, Itaú Unibanco’s offer for the minorities of Itaú Corpbanca is great value for Itaú Unibanco shareholders, but we do not believe that this is so clear cut
- In Chile, Itaú Corpbanca is addressing its scale issue through cost control and its digital banking strategy; Colombia is more of a challenge, not helped by President Petro’s anti-business attitude
- We see this as a fair offer for Itaú Corpbanca shareholders, given the drag from Colombia; yet it needs a successful Colombia disposal to create value for Itaú Unibanco shareholders
Africa Oil Corporation | Investor Presentation Poised for Transformational Value Upside (Africa Oil Corporation) PDF File
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):
Estonia Estonian Parliament Mar 5, 2023 (d) Confirmed Mar 3, 2019
- Kazakhstan Kazakh House of Representatives Mar 19, 2023 (d) Confirmed Jan 10, 2021
- Turkmenistan Turkmen National Assembly Mar 31, 2023 (t) Date not confirmed Mar 25, 2018
- Bulgaria Bulgarian National Assembly Apr 2, 2023 (d) Confirmed Oct 2, 2022
- Paraguay Paraguayan Chamber of Senators Apr 30, 2023 (d) Confirmed Apr 22, 2018
- Paraguay Presidency of Paraguay Apr 30, 2023 (d) Confirmed Apr 22, 2018
- Paraguay Paraguayan Chamber of Deputies Apr 30, 2023 (d) Confirmed Apr 22, 2018
- Thailand Thai House of Representatives May 7, 2023 (t) Date not confirmed Mar 24, 2019
- Greece Greek Parliament Jun 8, 2023 (t) Date not confirmed Jul 7, 2019
- Turkey Grand National Assembly of Turkey Jun 18, 2023 (t) Date not confirmed Jun 24, 2018
- Turkey Presidency of Turkey Jun 18, 2023 (t) Date not confirmed Jun 24, 2018
- Cambodia Cambodian National Assembly Jul 23, 2023 (d) Confirmed Jul 29, 2018
- Pakistan Pakistani National Assembly Jul 31, 2023 (t) Date not confirmed Jul 25, 2018
Emerging Market IPO Calendar/Pipeline
- (Note: The shares in the IPO are being offered by the Cayman Islands-incorporated holding company and not by the underlying Chinese operating company. Please see “Risk Factor – Risks Related to Doing Business in China” in the prospectus.)We are primarily engaged in sales of semiconductor products and electronic component products to customers in Hong Kong and the People’s Republic of China (PRC) via our B2B online platform – www.iczoomex.com. These products are primarily used by China-based SMEs (small and medium-sized enterprises) in the consumer electronics industry, the Internet of Things (“IoT”) industry, the automotive electronics business and the industry control segment. In addition to sales of electronic component products, we also provide services to customers such as temporary warehousing, logistics and shipping, and customs clearance, and charge them additional service commission fees. We sell two categories of electronic component products: (i) semiconductor products and (ii) electronic equipment, tools and other products. Our semiconductor products primarily include various integrated circuit, discretes, passive components and optoelectronics, and our equipment, tools and other electronic component products primarily include various electromechanical, maintenance, repair & operations (“MRO”) items and various design tools.**Note: For the fiscal year that ended June 30, 2022, our net income was $2.57 million on revenue of $290.38 million. (These figures – in U.S. dollars – are in the chart below. The company updated its financial statements with FY2022 results in an F-1/A filing dated Dec. 2, 2022.)(Note: ICZoom Group cut its IPO in half to 1.5 million shares – down from 3.0 million shares – and kept the price range at $4.00 to $5.00 – to raise $6.75 million, in an F-1/A filing dated Feb. 2, 2023. **ICZoom completed a reverse stock split on a 1-for-2 ratio on Aug. 8, 2022.)(Background: ICZoom Group cut its IPO to 3.0 million shares, down from 4.4 million shares, and reduced the price range to $4.00 to $5.00, down from $5.00 to $6.00, in an F-1/A filing dated Sept. 9, 2022. Estimated IPO proceeds under the new terms are $13.5 million – down 43.8 percent from the previous estimate of $24 million. The company also changed underwriters in its Sept. 9, 2022, filing, by naming The Benchmark Company LLC as its sole book-runner; the previous underwriters were Prime Number Capital and Shengang Securities. ICZoom Group Inc. filed an F-1/A dated June 21, 2022, with updated financial statements for the six months that ended Dec. 31, 2021. Previously: ICZoom Group Inc. filed its F-1 on Aug. 23, 2021. ICZoom’s original terms were set in its F-1/A filing on Sept. 17, 2021: 4.4 million shares at $5.00 to $6.00 to raise $24 million. ICZoom Group Inc. had filed confidential IPO paperwork with the SEC on April 1, 2021.)
- Note: From the prospectus – Shengfeng Development Limited is a holding company incorporated in the Cayman Islands exempted company. This is an IPO of the Class A ordinary shares of the offshore holding company in the Cayman Islands. Its operations are conducted through its subsidiary in China, the VIE, and the VIE’s subsidiaries. You are not investing in Shengfeng Logistics, the VIE, or the VIE’s subsidiaries.The VIE is one of the leading contract logistics service providers in China. Since the establishment of the VIE in 2001, our mission has been to provide logistics solutions to companies in need of storage and delivery assistance in China. Through our experienced management team, we apply our well-established management system and operation procedures to assist companies in China to increase efficiency and improve their own management systems with respect to transportation, warehousing and time management. We aim to provide our clients with superior and customized services. Our business slogan is “When you entrust us with your goods, we cherish them as our own.”Contract logistics is a comprehensive process that merges traditional logistics with supply chain management. Contract logistics companies outsource resource management tasks to third-party companies and handle activities such as planning and designing supply chains, designing facilities, processing orders, collecting payments, managing inventories, and providing client services. The contract logistics industry in China has been expanding in recent years. According to Frost & Sullivan, since 2019, the market size of the contract logistics industry has reached RMB1,154.9 billion and is expected to reach RMB1,709.9 billion by 2024. We are a China-based, business-to-business, or “B2B,” independent contract logistics company with consolidated revenue of approximately $346.7 million and $287.5 million for the fiscal years ended Dec. 31, 2021, and 2020, respectively. Based on the report provided by Frost & Sullivan, in 2020 and 2019, the VIE ranked top 50 among all B2B independent contract logistics companies in China.Our integrated logistics solution services are comprised of three segments: (1) B2B freight transportation; (2) cloud storage; and (3) value-added services. Since 2001, we, through the VIE and the VIE’s subsidiaries, have developed extensive and reliable transportation networks in China, covering 341 cities in over 31 provinces as of Dec. 31, 2021. In addition, we, through the VIE and the VIE’s subsidiaries, have provided services to over 4,000 manufacturers and trading companies in China, including companies such as CATL Battery, Bright Dairy, SF Express, Schneider Electric, and Xiaomi.**Note: Revenue and net income figures are for the 12 months that ended June 30, 2022.(Note: Shengfeng Development Ltd. cut the size of its IPO to 3.0 million shares – down from 5.0 million shares – at a price range of $4.00 to $5.00 – to raise $13.5 million, according to an F-1/A filing dated Feb. 17, 2023. The new terms represent a 46 percent reduction in the IPO’s size. Shengfeng Development Ltd. also updated its financial statements through June 30, 2022, in its F-1/A filing on Feb. 17, 2023.) (Background on previous filings: Shengfeng Development Ltd. cut the size of its IPO to 5.0 million shares – down from 8.0 million shares initially – and set the assumed IPO price at $5.00 – the top of its previous $4.00-to-$5.00 range – to raise $25.0 million (down from $36.0 million initially) in an F-1/A filing dated Jan. 25, 2023. Shengfeng Development also disclosed its proposed symbol – SFWL – for its NASDAQ listing in its F-1/A filing on Jan. 25, 2023. Shengfeng Development Ltd. filed its F-1 on Sept. 9, 2022, taking the unusual step of setting terms for its IPO at the same time – 8.0 million Class A ordinary shares at $4.00 to $5.00 to raise $36.0 million. This is a NASDAQ listing.)
- Note: Investors in our ordinary shares (in the IPO) are purchasing equity interests in the Cayman Islands holding company, and not in the Chinese operating entities. We are a Cayman Islands holding company and conduct our operations in China through Nanping Golden Heaven Amusement Park Management Co., Ltd. (“Golden Heaven WFOE”) and its subsidiaries. We hold 100% equity interests in our PRC subsidiaries, and we do not use a VIE structure.Through our subsidiaries, we operate six amusement parks and water parks in southern China.As of the date of this prospectus, Golden Heaven WFOE has acquired 100% equity interests in the following PRC subsidiaries: (i) Changde Jinsheng Amusement Development Co., Ltd. (“Changde Jinsheng”), (ii) Qujing Jinsheng Amusement Investment Co., Ltd. (“Qujing Jinsheng”), (iii) Tongling Jinsheng Amusement Investment Co., Ltd. (“Tongling Jinsheng”), (iv) Yuxi Jinsheng Amusement Development Co., Ltd. (“Yuxi Jinsheng”), (v) Yueyang Jinsheng Amusement Development Co., Ltd. (“Yueyang Jinsheng”), and (vi) Mangshi Jinsheng Amusement Park Co., Ltd. (“Mangshi Jinsheng”).Our corporate headquarters is in Yanping District, Nanping City, Fujian Province, China. According to government authorities in Fujian Province, Yanping District is known as “the birthplace of Chinese amusement park industry” and entrepreneurs from Yanping District have expanded beyond Yanping District and established their presence all across China. Through the operating entities, we are a leading amusement park operator in Yanping District and an active player in developing the Chinese amusement park industry. We aim to become the leading regional amusement park operator in China.The parks of the operating entities occupy approximately 426,560 square meters of land in the aggregate and are located in geographically diverse markets across the south of China. Due to the geographical locations of the parks and the ease of travel, the parks are easily accessible to an aggregate population of approximately 21 million people. The parks offer a broad selection of exhilarating and recreational experiences, including both thrilling and family-friendly rides, water attractions, gourmet festivals, circus performances, and high-tech facilities. As of the date of this prospectus, the parks collectively contain 139 rides and attractions.Our revenue is primarily generated from the Chinese operating entities’ selling access to rides and attractions, charging fees for special event rentals, and collecting regular rental payments from commercial tenants.**Note: Revenue and net income figures are in U.S. dollars for the fiscal year that ended Sept. 30, 2022.(Note: Golden Heaven Group Ltd. filed an F-1/A dated March 2, 2023, in which it slashed the size of its IPO to 2.0 million ordinary shares – down from 6.0 million shares – and kept the price range at $4.00 to $5.00 – to raise $9.0 million. Under the new terms, Golden Heaven Group’s IPO will raise $18 million less than under its original terms – a cut of 67 percent in the estimated IPO proceeds. Golden Heaven Group Ltd. filed an F-1/A on Feb. 17, 2023, and disclosed the terms for its IPO: 6.0 million ordinary shares at $4,00 to $5.00 to raise $27.0 million. Golden Heaven Group also updated its financial statements in the Feb. 17, 2023, F-1/A filing to include its revenue and net income for the fiscal year that ended Sept. 30, 2022. Background: Golden Heaven Group filed its F-1 on Nov. 4, 2022; it submitted confidential IPO documents to the SEC on June 22, 2022.)
Emerging Market ETF Launches
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:
- 1/31/2023 – Strive Emerging Markets Ex-China ETF STX – Passive, equity, emerging markets
- 1/20/2023 – Putnam PanAgora ESG Emerging Markets Equity ETF PPEM – Active, equity, ESG, emerging markets
- 1/12/2023 – KraneShares China Internet and Covered Call Strategy ETF KLIP – Active, equity, China, options overlay, thematic
- 1/11/2023 – Matthews Emerging Markets ex China Active ETF MEMX – Active, equity, emerging markets
- 12/13/2022 – GraniteShares 1.75x Long BABA Daily ETF BABX – Active, equity, leveraged, single stock
- 12/13/2022 – Virtus Stone Harbor Emerging Markets High Yield Bond ETF VEMY – Active, fixed income, junk bond, emerging markets
- 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
Emerging Market ETF Closures/Liquidations
Frontier and emerging market highlights:
- 3/30/2023 – Invesco BLDRS Emerging Markets 50 ADR Index Fund – ADRE
- 3/30/2023 – Invesco BulletShares 2023 USD Emerging Markets Debt ETF – BSCE
- 3/30/2023 – Invesco BulletShares 2024 USD Emerging Markets Debt ETF – BSDE
- 3/30/2023 – Invesco PureBeta FTSE Emerging Markets ETF – PBEE
- 3/30/2023 – Invesco RAFI Strategic Emerging Markets ETF – ISEM
- 2/17/2023 – Direxion Daily CSI 300 China A Share Bear 1X Shares – CHAD
- 1/13/2023 – First Trust Chindia ETF – FNI
- 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 (March 13, 2023) was also published on our Substack.
- Emerging Market Links + The Week Ahead (March 20, 2023)
- Emerging Market Links + The Week Ahead (August 8, 2022)
- Emerging Market Links + The Week Ahead (September 5, 2022)
- Emerging Market Links + The Week Ahead (January 2, 2023)
- Emerging Market Links + The Week Ahead (August 1, 2022)
- Emerging Market Links + The Week Ahead (May 16, 2022)
- Emerging Market Links + The Week Ahead (February 20, 2023)
- Emerging Market Links + The Week Ahead (January 23, 2023)
- Emerging Market Links + The Week Ahead (July 11, 2022)
- Emerging Market Links + The Week Ahead (August 29, 2022)
- China Internet Update (KraneShares)
- Emerging Market Links + The Week Ahead (May 30, 2022)
- Emerging Market Links + The Week Ahead (August 15, 2022)
- Emerging Market Links + The Week Ahead (June 27, 2022)
- Emerging Market Links + The Week Ahead (October 10, 2022)