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Weekly Roundup | 01.02.2024

Top headlines and news impacting Latin America, Africa and Southeast Asia commercial real estate.

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The hydrogen plant in Tula, Hidalgo (just northwest of Mexico City) is (was) operated by the French company Air Liquide. It is now occupied by Pemex, the state-owned petroleum company which is also the most indebted energy company in the world. Air Liquide has the option to appeal the compensation offered. In November a Danish fund announced a $10 billion investment to produce hydrogen in southern Mexico’s port of Salina Cruz.

The Royal Navy patrol vessel is the HMS Trent and was already in the area having been assigned to the Caribbean since December 2023. The UK characterizes Guyana as a regional ally and Commonwealth partner. Guyana had the fastest-growing economy in the world last year due to sizable oil fields coming online which are being managed by Exxon. Venezuela’s Maduro is signaling that the oil fields are his and is making moves to take them. If successful the addition would boost Venezuela’s economy by around 25%.  

HMS trent navy vessel going to Guyana

The move is in response to complaints by local producers that the Chinese steel imports are strangling them. China’s practice of exporting surplus steel at below-market prices is referred to as “dumping” and is aimed at distorting the market and making it impossible for other producers to find their feet. Some of Vietnam’s steel imports will be impacted with smaller tariffs of between 12% and 26%. Brazil’s steelmakers have requested a 25% tariff but this is unlikely given Brazil’s heavy reliance on China. The Americans and Europeans are busy crafting 25% tariffs on some steel imports to target dumping.  

china steel exports and production in 2023 by month

Wealthy Latin Americans are taking their fortunes to Miami at one of the fastest clips in history. The wealth fleeing is mainly coming from Mexico, Argentina, Chile, Peru, and several others according to JPMorgan. Brazil’s largest banks are responding and Banco Bradesco SA has increased headcount in Miami from 190 to 230 recently. Its assets under management have doubled since 2019 to $4 billion. Sao Paulo-based Unibanco has increased its AUM by 10% this year alone to roughly $24 billion. Chile, Peru, and Colombia lurching to the left has quickened capital flight.

BRICS is a rhetorical body without a plan outside of opposing the current order which has been in the process of collapsing under its own weight for some time. The lack of a plan or cohesion is why Emerging Real Estate Digest has recently called the BRICS expansion a “nothingburger”. The new members are Saudi Arabia, Egypt, Ethiopia, UAE, and Iran.

Milei waving

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In Q3 2023 foreign capital inflows to Nigeria plunged to the lowest level in over a decade, totaling $654.65 million. This figure is 18% lower compared to the same quarter in 2022. Some of the decline is positive and is the result of the current government’s push to borrow less from abroad and more domestically. A paltry 1% of the capital imported was for FDI and 78% was for foreign loans. Nigeria has great potential but is against the wall with low forex reserves, a tanking currency, an economy in shambles, and little to no foreign investment occurring.

Nigeria crude production v price

Felix Tshisekedi won re-election with more than 70% of the vote. Protests disputing the results were quickly put down. Opposition candidates have two days to oppose the results and the constitutional court seven days to decide. Final results are expected by January 10, and the swearing-in at the end of January.

China’s Belt and Road Initiative (“BRI”) is a monumental venture to expand China-oriented trading routes throughout the globe. Expanding the Lobito Corridor makes it easier to export minerals and goods from the mineral-rich areas of Zambia, the DRC, and Angola to the west coast of Africa for quick export to America and Europe. The millions thus far committed by Washington DC amount to its largest rail infrastructure investment ever in Africa and the first direct counter to China’s BRI.

proposed lobito corridor expansion in zambia

The Zambia state-owned ZCCM Investments Holdings is selling a majority stake in Mopani Copper Mines to UAE’s International Resources Holdings for $1.1 billion. ZCCM took control of the assets in 2021 from Glencore agreeing to pay $1.5 billion in a deal funded by debt. The UAE investment will be used to pay off some of the debt, provide working capital, and fund expansion. The goal for Mopani is to produce 200,000 metric tons of copper by 2027. It produced 72,694 in 2022, down from 87,618 metric tons in 2021.

Zambia copper output

With an economy in shambles and inflation exceeding twenty-five percent, the default on a $33 million interest payment is no surprise. This is the third sovereign default (Zambia and Ghana) in Africa in the previous three years. The country has been plagued by an unending civil war and now faces high inflation, low forex, large external debt volumes, and a bad drought last year. It’s so bad even China has largely excluded it from its BRI.

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The ambitious land bridge will cost $30 billion and require building two deep water ports from scratch, and new rail infrastructure between them. Thailand’s goal is to become a regional trading hub taking some business from Singapore. Its manufacturing hub in the east of the country would play a role, as would China’s extensive rail infrastructure investments it has planned through Laos, Cambodia, Thailand, and Vietnam. China is rightfully concerned about Malaca Strait disruptions and is pushing Thailand to hurry this project along. Thailand would like to finish the project by 2030. The biggest roadblock is that the project isn’t feasible economically and thus unlikely to gain investment.

Japan has vast capital to invest and must look abroad for new markets. Its domestic consumption will continue to fall given its poor demographics as the oldest country in the world. Vietnam, like the Philippines, has the oppositive problem of poor capital markets with young populations eager to grow. Japanese companies currently hold $2.6 trillion in cash reserves.

Japan investments to the world ranked 2023

President Marcos’ goal is to bring poverty below 9% before 2028. It has dropped slightly from 23.7% in 2021 to 22.4% in 2023. The Philippines is the only Christian and English-speaking country in Asia. It should be doing better and have tighter economic integration with the West. It has 110 million inhabitants and many of the minerals the world wants.




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