Emerging Market Links + The Week Ahead (January 23, 2023)
CNY, SE Asia food delivery players struggle, global stock market crash + most polarized countries surveys, Malaysia's EU pushback, Americanas files bankruptcy and the week ahead for emerging markets.
If you live in SE Asia, you are probably aware the food delivery and related industries (e.g. online groceries etc) are facing headwinds. In fact, I had interviewed a few people in the industry a few months ago who were just laid off from such operations. Singapore-based consulting firm Momentum Workshas an interesting report going into detail about where major players in the region stand.
Meanwhile, there are a couple of interesting recent infographics covering the most polarized countries plus a survey (with the results by country) of whether global stock markets will crash this year.
Finally, I have adjusted the payment amount for paid subscriptions and will place most content from future “EM Fund Stock Picks & Country Commentaries” posts behind a paywall. See DISCLAIMER: EM Fund Stock Picks & Country Commentaries Posts for a detailed explanation about these posts (scheduled to be emailed, for now, on Tuesdays at 9AM EST) as well as the first two non-paywalled ones as future posts will roughly follow the same format:
Based on the latest [apparently free] report [Food Delivery Platforms in Southeast Asia 2023]by Singapore-based consulting firm Momentum Works, the food delivery industry in Southeast Asia has declined in the three largest markets: Indonesia, Thailand, and Singapore.
Meanwhile, Malaysia, the Philippines, and Vietnam have experienced significant growth. This growth can be attributed to the expansion of Grab and ShopeeFood, which have increased their market share.
Note: Indonesia and Malaysia are the world’s biggest palm oil producers. Some Malaysian plantation companies also have plantations in Africa. See our Malaysia ADRs List.
Several publicly-listed Malaysian palm oil companies, however, have established refineries in Europe and an export ban would disrupt their operations.
New EU laws requiring companies to prove their products don’t originate from deforested land has been met with a Malaysian response.
Deputy prime minister and minister for plantations and commodity crops Fadillah Yusof, has simply said, Malaysia will look for other customers.
The new European Union law coming into effect will affect imports of palm oil, meat, wood products, soy, cocoa, and coffee. The majority of these products come from developing economies, where many rural communities are still trying to escape poverty.
A bit in the technical weeds, but worth reading as they discuss the results of applying this methodology to several EMs.
The CAPE methodology is well suited for volatile and cyclical markets such as those we find in Emerging Markets. Countries in the EM asset class are prone to boom-to-bust economic cycles which are accompanied by large liquidity inflows and outflows that have significant impact on asset prices. These cycles often lead to periods of extreme valuations both on the expensive and cheap side. The Cyclically Adjusted Price Earnings multiple (CAPE) has proven effective in highlighting them.
We map index returns and CAPE ratios for the U.S., GEM (Global Emerging Markets) and the most important emerging market countries (China, India, Taiwan, Korea and Brazil) and also for several countries of interest (Turkey, Philippines and Mexico).
“If you look at a lot of the emerging market ETFs, a lot of them don’t have tech,” he observed. “A lot of them are actually value sectors. Anybody argues that value is going to outperform growth is making an argument for emerging markets. Anybody that argues that commodities are going to outperform stocks is making an argument for emerging markets. Anybody that’s going to argue that energy would outperform tech is making an argument for emerging markets.”
“If you really want to get creative, then China is probably the place to be,” he said. “Having said that, there are a lot of other emerging markets you can argue for, like India and a lot of Latin America.”
Good wide ranging interview. At the approx. 15 Min mark, the focus shifts more towards emerging markets.
A Rio de Janeiro court on Thursday accepted Brazilian retailer Americanas SA's (AMER3.SA) bankruptcy protection request, days after the company disclosed nearly $4 billion in accounting inconsistencies that have sparked a legal feud with creditors and investors.
Lucas Pogetti, a partner at M&A advisers RGS Partners, said a large part of Americanas' previously disclosed cash position was linked to the prepayment of receivables or deposited with creditors.
"Naturally, when the banks became aware of the company's real situation they began to adopt a more aggressive posture to protect themselves, consequently restricting access to resources," Pogetti said.
It's largely been a lost decade for emerging markets, but they are long overdue for a comeback and may present some of the best value opportunities in the world right now.
J.P. Morgan AM Updates
Note: The PDF files contain numerous macro charts or slides that may be useful:
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):
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):
QuantaSing Group Limited is a holding company incorporated in the Cayman Islands. (See note on company structure.)
QuantaSing Group is the largest online learning service provider in China’s adult learning market for personal interest courses and among the top five service providers in China’s total adult learning market, in terms of revenue in 2021, according to the Frost & Sullivan report. We offer easy-to-understand, affordable and accessible online courses to adult learners under various brands, including QiNiu, JiangZhen and QianChi, empowering them to pursue personal development.
**Note on Company Structure: We carry out our business in China through our wholly owned PRC subsidiary (“WFOE”) and its contractual arrangements, commonly known as the VIE structure, with a variable interest entity (the “VIE”) and its subsidiaries (collectively, the “affiliated entities”) based in China. The VIE structure is used to provide investors with exposure to foreign investment in China-based companies where the PRC law restricts direct foreign investment in certain operating companies, such as certain value-added telecommunication services and other internet related business. Neither QuantaSing Group Limited nor our WFOE owns any equity interests in the affiliated entities.
We launched our financial literacy learning services in July 2019 and quickly became the largest online financial learning service provider for adults in China, with a market share of 36.9% in terms of revenue in 2021, according to the F&S report. In August 2021, we expanded our offerings into a selective repertoire of other personal interest courses beyond financial literacy, to leverage the general public’s gradual awakening to more diverse needs in pursuing personal development and lifelong learning.
In February 2020, we launched our marketing services to financial intermediary enterprises, allowing them to connect with our learners to enlarge their customer base.
In June 2022, we launched our enterprise talent management services to provide enterprise customers with online talent assessment, training and learning services for internal employee management. These services have enabled us to broaden our service offerings into enterprise customers and evolve into a two-sided service provider for both individuals and enterprises.
EM 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:
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.
