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Weekend Reading / Global

Expensive endgame: Oil prices will rise in energy transition, good for oil EMs

Two decades ago, I was a precocious new political analyst in Shell’s scenario planning team. My colleague Janet Ogunkoya argues that Africa, which relies on international oil companies (IOCs, also known as oil majors or supermajors) more than other r...
Tellimer Research Paul
Paul Domjan @ Tellimer Research 24 July 2021
Expensive endgame: Oil prices will rise in energy transition, good for oil EMs
Expensive endgame: Oil prices will rise in energy transition, good for oil EMs

Mexico: Ahead of the Curve

Gross Domestic Product (2Q21 P). On complementary indicators, the participation rate would pick up given the continuing return of people back to the labor force. Turning to primary activities, we forecast a 4.2% m/m increase (+5.1% y/y), rebounding a...
Banorte Juan Carlos
Juan Carlos Alderete Macal @ Banorte 23 July 2021

Megacable Holdings: MEGA, Quarterly Report 2Q21: Advance in subscribers stood out. We raised to Buy

Mega reported positive figures, in line with our estimates. A quarter with figures that should be welcomed by the market. Unique subscribers surpassed 4 million, with an 8.5% y/y growth (Internet: +13.0%, Video: +6.0% and Telephony: +23.7%). In the C...
Banorte Marissa
Marissa Garza Ostos @ Banorte 23 July 2021

Axtel: AXTEL, Quarterly Report 2Q21: Government continues to pressure the results

Infrastructure performed well, although Services are still weak. Axtel's report showed figures in line with expectations. In contrast, the Infrastructure unit performed favorably with an increase of 9.5% y/y, driven by dark fiber prepaid contracts to...
Banorte Marissa
Marissa Garza Ostos @ Banorte 23 July 2021

Alpek: ALPEK, Quarterly Report 2Q21: Recovery, profitability and financial strength

Favorable dynamics that should be welcomed by the market. The results underpin Alpek within our selection of companies benefiting from a favorable environment. The company improved its 2021 guidance, and now anticipates EBITDA of US$880 million (+56%...
Banorte Marissa
Marissa Garza Ostos @ Banorte 23 July 2021

Alfa: ALFA, Quarterly Report 2Q21: Clear recovery momentum; Guidance rises again

Balance sheet continues to strengthen, with Alpek once again standing out. Alfa's revenues amounted to MXN 74.8 billion, while EBITDA reached MXN 10.0 billion, representing year-on-year growth of 0.7% and 87.8%, respectively, recalling that these var...
Banorte Marissa
Marissa Garza Ostos @ Banorte 23 July 2021

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This morning's briefing

Zomato proves tasty for investors.
The share price of loss-making food delivery group Zomato jumped 65% on its debut on the Mumbai stock exchange on Friday, closing the day at Rs125.85, from the issue price of Rs76. This values the company at cUS$12bn. The food delivery boom has, for the most part, been associated with developed markets and the dominant emerging market, China. But this seems to be changing, particularly in light of the difficulties for Chinese tech firms and the disappointing Deliveroo IPO in London. We have identified five markets with underrated prospects that have not received the same level of attention as the West and China. Get the full story →
Zomato proves tasty for investors.
India embraces CBDC.
India has become the latest country to explore the merits of sovereign-backed central bank digital currency (CBDC), with the Reserve Bank of India (RBI) announcing on 22 July that it was considering launching a pilot programme. RBI Deputy Governor Sankar said that India’s CBDC would help protect people from the volatility of private cryptocurrencies and lower the use of cash in the economy. The announcement marks something of a turnaround for the RBI, which has previously worried about the anonymity of digital currency transactions and the implications for money-laundering and terrorist financing. Paul Domjan argues that there are three paths to genuine CBDC – the EU, China and Ukraine routes. It is not yet clear whether India will implement a genuine CBDC and, if so, which of these routes it will choose. Get the full story →
India embraces CBDC.
Asia's new Covid lockdowns are the latest headwind for global chip supplies.
Surging Covid cases in Southeast Asia are further threatening supply chains for one of the most in-demand products – semiconductors. Across Thailand, Vietnam and Malaysia, where many of the biggest players including Samsung have operations, tighter lockdowns are reducing the number of workers on the production lines for everything from capacitors to chip packaging. TSMC is the largest stock in the global EM index, the largest and most advanced outsourced semiconductor manufacturer and, arguably, right in the middle of the long-term tussle between the US and China over control of the Taiwan Strait and the technology supply chain. In short, TSMC on its own is as important to the semiconductor industry as the entire Middle East is to the oil industry. Get the full story →
Asia's new Covid lockdowns are the latest headwind for global chip supplies.
China mulls harsh penalties for Didi following US IPO.
Reports suggest Beijing is likely to impose more severe sanctions on Chinese ride-hailing giant Didi than it did on Alibaba, which was hit by a US$2.8bn fine. In addition to financial penalties, options could even include a forced delisting of Didi’s US shares or stringent management oversight. Didi’s rapid fall from grace highlights a key area of focus for China’s regulators: customer data. The country's new data security law gives the government greater access to the information collected by tech firms. And by classifying such data as a national asset, the law also places restrictions on its transfer abroad. These developments have dampened investor appetite for many US-listed Chinese firms. To mitigate these risks, we have compiled lists of alternative investments in 4 key growth segments: fintech; e-commerce and logistics; electric vehicles and internet/social media. Get the full story →
China mulls harsh penalties for Didi following US IPO.
South Africa is in no rush to hike rates.
The South African Reserve Bank (SARB) yesterday opted to once again keep its repo rate unchanged at 3.50%, with the decision being unanimous. The tone of the meeting was relatively dovish, and on balance, it appears that the SARB may not hike rates before the end of the year, according to analysts at ETM Analytics. The central bank still expects the economy to grow by 4.2% this year, but this isn't as simple as it appears at face value. Q1 growth came in much better than the SARB expected, but the positive effect of this has now been negated by the recent civil unrest. This has severely dented investor confidence and will impact the labour market. Get the full story →
South Africa is in no rush to hike rates.
Saudi-UAE frostiness is evident despite oil output agreement.
Reports of long queues of trucks backed up on the UAE side of its border with Saudi Arabia is consistent with Hasnain Malik’s view that while the disagreement over oil output has been resolved for now, the increased competition between the two GCC neighbours in non-oil sectors will have a lasting impact. Road freight has been a victim of temporary friction between the two countries before. This time, however, Saudi has introduced higher tariffs on GCC imports that do not have a sufficient local component, which likely permanently reduces the competitiveness of freezones in the likes of Dubai. Saudis also represent about 6% of purchasers of Dubai real estate. Get the full story →
Saudi-UAE frostiness is evident despite oil output agreement.

This morning's briefing

Zomato proves tasty for investors.
The share price of loss-making food delivery group Zomato jumped 65% on its debut on the Mumbai stock exchange on Friday, closing the day at Rs125.85, from the issue price of Rs76. This values the company at cUS$12bn. The food delivery boom has, for the most part, been associated with developed markets and the dominant emerging market, China. But this seems to be changing, particularly in light of the difficulties for Chinese tech firms and the disappointing Deliveroo IPO in London. We have identified five markets with underrated prospects that have not received the same level of attention as the West and China. Get the full story →
Zomato proves tasty for investors.
India embraces CBDC.
India has become the latest country to explore the merits of sovereign-backed central bank digital currency (CBDC), with the Reserve Bank of India (RBI) announcing on 22 July that it was considering launching a pilot programme. RBI Deputy Governor Sankar said that India’s CBDC would help protect people from the volatility of private cryptocurrencies and lower the use of cash in the economy. The announcement marks something of a turnaround for the RBI, which has previously worried about the anonymity of digital currency transactions and the implications for money-laundering and terrorist financing. Paul Domjan argues that there are three paths to genuine CBDC – the EU, China and Ukraine routes. It is not yet clear whether India will implement a genuine CBDC and, if so, which of these routes it will choose. Get the full story →
India embraces CBDC.
Asia's new Covid lockdowns are the latest headwind for global chip supplies.
Surging Covid cases in Southeast Asia are further threatening supply chains for one of the most in-demand products – semiconductors. Across Thailand, Vietnam and Malaysia, where many of the biggest players including Samsung have operations, tighter lockdowns are reducing the number of workers on the production lines for everything from capacitors to chip packaging. TSMC is the largest stock in the global EM index, the largest and most advanced outsourced semiconductor manufacturer and, arguably, right in the middle of the long-term tussle between the US and China over control of the Taiwan Strait and the technology supply chain. In short, TSMC on its own is as important to the semiconductor industry as the entire Middle East is to the oil industry. Get the full story →
Asia's new Covid lockdowns are the latest headwind for global chip supplies.
China mulls harsh penalties for Didi following US IPO.
Reports suggest Beijing is likely to impose more severe sanctions on Chinese ride-hailing giant Didi than it did on Alibaba, which was hit by a US$2.8bn fine. In addition to financial penalties, options could even include a forced delisting of Didi’s US shares or stringent management oversight. Didi’s rapid fall from grace highlights a key area of focus for China’s regulators: customer data. The country's new data security law gives the government greater access to the information collected by tech firms. And by classifying such data as a national asset, the law also places restrictions on its transfer abroad. These developments have dampened investor appetite for many US-listed Chinese firms. To mitigate these risks, we have compiled lists of alternative investments in 4 key growth segments: fintech; e-commerce and logistics; electric vehicles and internet/social media. Get the full story →
China mulls harsh penalties for Didi following US IPO.
South Africa is in no rush to hike rates.
The South African Reserve Bank (SARB) yesterday opted to once again keep its repo rate unchanged at 3.50%, with the decision being unanimous. The tone of the meeting was relatively dovish, and on balance, it appears that the SARB may not hike rates before the end of the year, according to analysts at ETM Analytics. The central bank still expects the economy to grow by 4.2% this year, but this isn't as simple as it appears at face value. Q1 growth came in much better than the SARB expected, but the positive effect of this has now been negated by the recent civil unrest. This has severely dented investor confidence and will impact the labour market. Get the full story →
South Africa is in no rush to hike rates.
Saudi-UAE frostiness is evident despite oil output agreement.
Reports of long queues of trucks backed up on the UAE side of its border with Saudi Arabia is consistent with Hasnain Malik’s view that while the disagreement over oil output has been resolved for now, the increased competition between the two GCC neighbours in non-oil sectors will have a lasting impact. Road freight has been a victim of temporary friction between the two countries before. This time, however, Saudi has introduced higher tariffs on GCC imports that do not have a sufficient local component, which likely permanently reduces the competitiveness of freezones in the likes of Dubai. Saudis also represent about 6% of purchasers of Dubai real estate. Get the full story →
Saudi-UAE frostiness is evident despite oil output agreement.
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