EMIA Week in Review: LatAm Foreign Ministers Address Venezuelan Situation, Indian E-commerce Trends

August 14, 2017

EMIA

Triple digit inflation in Venezuela: US dollar trades at 10.387 Bolivar

MercoPress

  • The extreme volatility of Venezuela's exchange rate has the crisis-hit country's shop owners hurriedly marking up their merchandise and consumers balking at the higher price tags.

  • Just last week, the Bolivar currency fell around 70% on the black market, according to DolarToday, the opaque U.S.-based website that dictates the black market rate.

  • Although the currency roared back this week to around 10,387 Bolivars to the U.S. dollar, prices for often imported products have already been adjusted, heaping more hardship on Venezuelans who often earn only a handful of dollars per month.

  • The monthly minimum wage in Venezuela is 97,531 Bolivars, or not even US$1 per day on the parallel exchange rate, making it the lowest in Latin America despite President Nicolas Maduro's frequent increases.

 

Afreximbank opens shareholding to Investors in Africa

BizNis Africa

  • In a major innovation in Africa’s capital markets, supranational trade finance bank African Export-Import Bank (Afreximbank) is opening its shareholding to the investing public through the issuance of Depositary Receipts.

  • In a deal being arranged by SBM Group, and announced today in Mauritius, Afreximbank is launching a $300 million equity offering, using Depositary Receipts backed by its Class “D” shares.

  • The Depositary Receipts, whose listing has been approved on the Stock Exchange of Mauritius, mark the fruition of a unique initiative on which Afreximbank and SBM Group have worked in the last few months and represent a big first for Africa’s equity capital markets.

  • This represents the first time a supranational bank is issuing Depositary Receipts through an African stock exchange.

 

The Southern Economic Corridor: Boosting Trade and Investment in Cambodia

ASEAN Briefing

  • Stretching eastwards from Myanmar through Thailand and Cambodia to Vietnam, the Southern Economic Corridor (SEC) aims to further integrate the Association of Southeast Asian Nations (ASEAN) by improving connectivity and trade.

  • In Cambodia, new clusters are growing around border towns and in existing industrial hubs along the route of the SEC.

  • Foreign businesses are investing in Cambodia, benefiting from both the country’s cheap labor pool as well as the improved connectivity brought on by the SEC. The SEC is one of the many development projects initiated in the Greater Mekong Subregion (GMS).

  • In partnership with the Asian Development Bank, the GMS Program for subregional cooperation was established in 1992 to facilitate economic cooperation and growth between Cambodia, China’s Yunnan Province and Guangxi Zhuang Autonomous Region, Laos, Myanmar, Thailand, and Vietnam.

 

Challenges of Energy Reform in Mexico

Hydrocarbons Mexico

  • Even though Energy Reform’s results have exceeded the government’s expectations so far, there are still challenges to overcome along the way.

  • According to data from the National Hydrocarbons Commission (CNH), there was an average of 15.5 drill platforms operating; 7.4 of them corresponded to private companies and 8.1 corresponded to Pemex, meaning that firms have reactivated marine exploration in Mexico.

  • The entity said that despite the recovery in exploration activities, drilling wells for exploratory and development are still low and rely heavily on Pemex.

  • The Confederation of Employers of the Mexican Republic (Coparmex) also said that only 30 companies have international certifications in Tabasco, which might represent challenges for the successful implementation of Energy Reform.

 

E-commerce in India: Market Trends and Regulations

India Briefing

  • India’s e-commerce market is growing exponentially.

  • The latest data presented by the software industry body NASSCOM shows that India’s online market share grew at the rate of 19 percent last year and will touch an estimated US$33 billion in 2017.

  • Significant improvements in technology and the rapid pace of growth in the digital payments sector over the last three years have increased the number of Indians buying online.

  • In this article, we discuss some of the major drivers shaping the momentum in favor of e-commerce in India, as well as key legal and regulatory considerations for online businesses.

 

New $550 million infrastructure fund launched in Africa

BizNis Africa

  • A.P. Moller Holding has together with PKA, PensionDanmark and Lægernes Pension launched a new infrastructure fund with a focus on Africa.

  • The fund has received commitments of $550 million from anchor investors.

  • The new fund will focus on investments in infrastructure in Africa to support sustainable economic growth in the region while delivering an attractive return to its investors.

  • The fund will be managed by A.P. Moller Capital, which is an affiliate of A.P. Moller Holding, and consists of a team lead by four partners, Kim Fejfer, Lars Reno Jakobsen, Jens Thomassen and Joe Nicklaus Nielsen.

 

Ibagué bans mining

Hydrocarbons Colombia

  • Colombian regions continue to ban the development of mining activities in their territories; this time it was Ibagué, Capital of the department of Tolima.

  • Ibagué was the first capital city to ban large-scale mining projects after its Mayor, Guillermo Alfonso Jaramillo, proposed this initiative to the city council and it was approved in a second debate.

  • Jaramillo emphasized that this decision is in defense of the ecosystem because it prohibits mining projects at a medium and large scale.

  • According to Camilo Delgado, member of the Liberal Party, artisanal mining and extraction of minerals from flowing water are not affected by this measure.

 

Angola Cables installs first direct subsea link between Africa and South America

BizNis Africa

  • Angola Cables today, 9 August 2017, took a step closer to completion of the South Atlantic Cable System (SACS) at an official launch in Sangano, Angola.

  • SACS is the first direct link between Africa and South America.

  • The installation of the South Atlantic Cable System (SACS) – a subsea cable with 40 Tbps of capacity that will extend more than 6,500 km to Fortaleza, Brazil – began on the Angolan coast in the municipality of Quissama.

  • The installation of SACS is considered a strategic project for Angola to advance the region’s digital economy and to improve global communications.

 

Fear of a Cristina Fernandez comeback has cost the Argentine central bank over a billion dollars

MercoPress

  • The Argentine primary, set to take place next Sunday, will see each political party choose their candidate for the upcoming midterm elections of 22 October.

  • The possibility of a comeback of ex president Cristina Fernandez has cost the Argentine central bank so far over a billion dollars in the last ten days.

  • Public opinion polls indicate that the ex president has a good chance of winning the Buenos Aires province Senate bench.

  • This has triggered a strong reaction in the markets and caution from business and investors, highly sensitive to risks and surprises.

 

China’s Five-in-One Business License: Pressure Mounts for Foreign Businesses to Implement

China Briefing

  • Companies in China with soon-to-be outdated certification would be wise to put the Five-in-One business license amendment on their upcoming agenda.

  • China’s Five-in-One system combines a business’ tax registration certificate, organization code, business license, social security registration certificate, and statistical registration certificate into a single document with one social credit code.

  • This has made setting up a business in China faster and easier for foreign investors.

  • Businesses without an integrated business license under the Three-in-One or Five-in-One system should now upgrade. The deadline for converting to Five-in-One certification is December 31, 2017. Beyond this date, all five certificates held by the company, now encompassed by the Five-in-One system, will be deemed as invalid and cancelled.

 

Macri confident in a flush of investments after his coalition win in midterm elections

MercoPress

  • President Mauricio Macri anticipated on Tuesday that investments in Argentina would multiply after what he predicted will be a triumph for his Let's Change Coalition in October's mid-term elections.

  • While Macri said his allies would win “by a lot” nationwide, he admitted polls showed a tight race between his party's candidate and ex president Cristina Fernandez for a Senate seat in Buenos Aires province.

  • In a television interview Macri said the Argentine economy was picking up steam and would grow 4.5% in the last quarter of 2017.

  • Growth of 4% next year would help lower the fiscal deficit.

 

Russia’s VTB Partners With China’s Alipay Partners To Develop Russian Merchant Network

Russia Briefing

  • Russia’s VTB Banking Group has entered into a partnership with China’s Alipay in a move that sees the world’s largest online and mobile payment platform join forces with Russia’s largest provider.

  • VTB had recently begun merchant acquiring for Alipay payments service in its over-120,000 Point of Sale (POS) device network, which now makes VTB Group the biggest partner of Alipay in Russia.

  • It is expected that more than 1 million Chinese travelers will benefit from the new partnership every year.

  • The service will be launched shortly after a pilot program in August. Q3-Q4 2017 will see its roll-out to the whole VTB network of close to 100,000 merchants.

 

Brazilian economy on course to a modest growth (2%) next year

MercoPress

  • Brazilian Central Bank President Ilan Goldfajn said that Latin America's largest economy remains weak though it is on course to show modest growth next year.

  • In an interview with a São Paulo radio station, he said Brazil may achieve growth of 2% in 2018 if the economy continues expanding at its current pace.

  • He also said he sees no risk to the continuing process of reducing inflation, adding the central bank will keep performing the role of keeping prices in check through adequate monetary policy.

  • “What we are seeing is a gradual recovery,” he told the Jovem Pan radio station, but refused to speculate on whether the government would change fiscal targets in view of falling tax revenue.

 

Canadian Investments into India Grow – Appeal of Expanding Economy, Stability, and Reforms

India Briefing

  • Canadian foreign direct investment (FDI) into India reached an estimated US$14 billion in 2016.

  • Much of this inflow came from large asset management companies and pension funds, which see India as an ideal destination for stable, long term investments.

  • Summarizing this optimistic view of India’s economic growth, Michael Sabia, President and CEO of Caisse de dépôt et placement du Québec (CDPQ), has called India’s potential “bright in a world of grey.”

  • This article looks in depth at why Canadian investors are suddenly so charmed with India.

 

Petrobras cuts gasoline prices to regain market share lost to imports

MercoPress

  • Brazil's Petrobras has reduced prices for the gasoline it sells in Brazil to below parity with the fuel imported from the United States, reducing profit margins to regain market share.

  • The company has sharply reduced the price gap between the value of gasoline sold at its refineries and the spot price in the U.S. Gulf of Mexico since early July.

  • At the same time, the company announced changes to its pricing to adopt almost daily adjustments, according to fuel market experts

  • A report from consultancy Tendências shows Petrobras' gasoline prices in Brazil since the adoption of the new strategy varied from 0.05 real per liter above the spot Gulf price to up to 0.03 real below that reference. That compares to prices before the new policy of 0.21 real on average above spot Gulf gasoline.

 

Washington imposes more sanctions in Venezuela: eight more top officials including a Chavez brother

MercoPress

  • Washington imposed sanctions on eight Venezuelan officials on Wednesday for their role in creating an all-powerful legislative body loyal to President Nicolas Maduro, while a mayor-turned-fugitive called for more anti-government protests.

  • The new U.S. sanctions targeted politicians (including a brother of ex leader Hugo Chavez) and security figures but stopped short of actions against Venezuela's vital oil industry.

  • Energy sector sanctions, which could cripple Venezuela's already ailing economy, are still being considered, U.S. officials said.

  • The sanctions followed Friday's installation of a legislative super-body known as the constituent assembly, made up entirely of allies of the ruling Socialist Party and armed with the power to rewrite the constitution.

 

Latin American Foreign Ministers will Address Venezuelan Situation in Peru

MercoPress

  • Latin American foreign ministers are scheduled to hold an extraordinary meeting this Tuesday in Lima to address the current state of affairs in Venezuela, Peruvian foreign minister Ricardo Luna announced.

  • “Foreign ministers of the four countries of the Pacific Alliance (Chile, Colombia, Mexico and Peru) and three member states of Mercosur, namely Argentina, Brazil and Paraguay will attend the meeting.”

  • “Uruguay will possibly come. Costa Rica, Guatemala, Honduras, Canada, Jamaica, Saint Lucia and Barbados, will come as well, for a total of 14 countries,” Luna told reporters.

  • In Luna’s words, the foreign ministers will assess recent events in Venezuela in the aftermath of the election and inauguration of the National Constituent Assembly.

 

Significant Barriers Remain for Asia’s RCEP deal

Global Risk Insights

  • The Regional Comprehensive Economic Partnership (RCEP) is a free trade deal encompassing 16 countries including China, India, Japan, South Korea, Australia, New Zealand, as well as ASEAN member countries.

  • Together this group represents more than 3.5 billion people and about a third of global GDP.

  • The deal is heralded as an opportunity to unite trade in the Asia Pacific and overcome some overlapping bilateral trade deals which obfuscate trade rules and regulations.

  • Despite political will from all sides to conclude the deal several significant barriers remain. The lack of pre-existing free trade deals between certain countries means RCEP could have drastic effects. India and China, India and Korea, and Japan and Korea, for example, currently have no existing mutual FTAs.

 

Hong Kong’s Startup Scene: the Future of Mainland–Hong Kong Economic Cooperation

China Briefing

  • While Hong Kong’s startup ecosystem is relatively young, it has grown quickly in recent years.

  • Many entrepreneurs are attracted by the city’s high rate of internet penetration, which has allowed for greater adoption of tech innovations. Additionally, the Hong Kong government has been aggressively promoting initiatives to expand entrepreneurship in the face of increased competition from southeast China.

  • However, Hong Kong’s proximity to Shenzhen, one of the key tech start-up hubs within mainland China, has added dynamic considerations to the Hong Kong startup environment, and this has multiple effects for multinationals and foreign investors.

  • In this article, we explore the rise of Hong Kong’s startup scene, and the multitude of factors that have contributed to its emergence. We also analyze what it augurs for the Mainland-Hong Kong relationship and how this will affect multinational companies.

 

Venezuela suspended indefinitely: “Without democracy, you can’t be part of Mercosur”

MercoPress

  • Mercosur foreign ministers meeting on Saturday in Brazil suspended Venezuela indefinitely for failing to uphold democratic norms amid an intensifying crackdown on dissent in the country.

  • The bloc previously suspended Venezuela in December for failing to uphold commitments it made when it joined the group in 2012.

  • The suspension will have little practical effect, with no economic sanctions or changes to trade or migration, and the bloc said it would try to limit any possible impact on Venezuelans to avoid exacerbating the humanitarian crisis in the country.

  • Brazilian Foreign Minister Aloysio Nunes said Venezuelans remain welcome in Brazil. Venezuelans routinely cross into the continent's largest nation in search of food and other basic supplies amid shortages back home. Nunes said the move would have a “political effect.”

 

Qatar’s maverick foreign policy: can it survive a new Gulf order?

Global Risk Insights

  • This week, Saudi Arabia and its allies raised the heat on Qatar by publishing a new blacklist of 18 groups and individuals with suspected ties with Doha.

  • They demanded Doha prosecute those named, including people who allegedly helped raise funds for Al Qaeda’s affiliates in Syria.

  • Qatar responded, as it has since marked the start of the intra-GCC crisis, by digging in its heels and insisting it had every right to an “independent” foreign policy.

  • It’s now clear that the latest round of tensions will be even more protracted than the last one, which took eight months to resolve in 2014.

 

Royal Mint will supply Argentina with 150 million Peso coin blanks

MercoPress

  • UK’s Royal Mint will supply Argentina with 150 million peso coins, after the institution won a contract to assist with the minting of a new coin series.

  • Announced on social media by UK chancellor Philip Hammond, the mint will work closely with its Argentine counterpart – Sociedad del Estado Casa de Moneda – to produce blanks for the new coin series.

  • According to Argentine media the blanks' contract is worth US$ 1.7 million.

  • An official from the Argentine counterpart said that there was an international bid because “there are no manufacturers of blanks in the country”.

 

The Guide to Understanding Vietnam’s Industrial Zones

Vietnam Briefing

  • The number of industrial parks in Vietnam continues to rise as foreign investment pours in.

  • As of September 2016, there were 325 industrial zones set up nationwide, with 220 already in operation on a total of 60,900 ha.

  • In 2017, the government plans to open three special economic zones in the Northern, Central and Southern key economic zones.

  • The parks occupy a natural land area of almost 85 thousand hectares, with about 66 percent of the total land area designated as industrial land for leasing. Occupancy reached 51.5 per cent overall, and 73 percent at operating industrial parks.

 

To the victor belong the spoils: The future of green energy

Global Risk Insights

  • With a combined push for technological development from Asia and the US for coal projects, international policy organizations may be forced to change their tune and accept that coal still has a place in a green energy future.

  • Trump set tongues wagging in June when he announced that the US would be withdrawing from the Paris Climate Accord, a global agreement to boost anti-climate change and mitigation policies through nationally determined contributions.

  • The most controversial leader the free world has ever seen, Trump has commandeered global discourse on energy production and brought the concept of clean coal to the fore, much to the chagrin of world leaders, scientists and climate activists the world over.

  • Despite the Paris agreement withdrawal, the US remains a member of the UN Framework Convention on Climate Change, no doubt with a view to influence global bodies to acceptcarbon capture technologies as a pillar of global energy production — and it might just work.

Tags: canada, china, crisis, doha, e-commerce, energy reform, fdi, green energy, hong kong, india, inflation, latam, mercosur, nicolas maduro, qatar, trump, venezuela
Posted in Global, Macro Economics, Macro Economics