Thursday, August 17, 2023
"The Big Emerging Market to Consider if China Stumbles", 17 AUGUST
When it comes to emerging markets investing, China looms large. It’s the world’s second-largest economy and that heft is reflected in supposedly diverse indexes and exchange traded funds. For example, the widely observed MSCI Emerging Markets Index allocates almost 30% of its weight to Chinese stocks, or more than its combined weight to Brazilian and Indian equities.
Speaking of India, it too is an enormous economy – currently Asia’s third-largest and, by some estimates, eventually the biggest in the world. More important than those data points, and they are important, is performance. India has delivered the goods for investors. Over the past three years – a period including myriad stumbles for broader emerging markets strategies – the MSCI India Index is higher by 40.3% while the MSCI China Index and the MSCI Emerging Markets Index are deeply in the red. Plus, Indian stocks were significantly less volatile than the China and emerging markets gauges over that period.
With those points and the specter of a China’s economy slumping in mind, investors might want to consider giving India ETFs a closer look.
WisdomTree India Earnings Fund (EPI)
EPI is one of the oldest India ETFs and it’s getting better with age as it has absolutely obliterated the MSCI India Index and other India ETFs over the past three years. An important point in EPI’s favor and one that likely explains some of its long-term out-performance is an index methodology that emphasizes profitability.
That reduces the number of speculative companies that appear in the ETF while serving to enhance the fund’s quality profile. Regarding quality, it’s a distinct factor from low volatility, but the former often begets the latter. Interestingly, EPI has been less volatile on an annualized basis over the past three years. Importantly, EPI is well-positioned to capitalize on India’s attractive demographic trends.
“India has a young and growing population with a median age of just under 29 years, a large and growing middle class, and a rapidly expanding skilled workforce,” according to WisdomTree research. “It also has the largest English-speaking population after the U.S., making it the preferred destination for outsourced manufacturing and services. In addition to this, the nation’s progress in enhancing literacy levels and education standards has positioned India as an emerging powerhouse of the world.”
VanEck Digital India ETF (DGIN)
Speaking of India’s alluring demographic trends, DGIN is a prime example of an ETF levered to those themes. It’s widely known that the behemoth economy is among the most technologically advanced in the world, but some of the old guard ETFs in this category aren’t adequately attuned to that theme.
Additionally, while it’s not yet on par with the U.S. or China, India’s e-commerce market is one of the fastest-growing in the world. That status is fortified by at least two pivotal points. First, India lacks the big-box retail infrastructure found in the U.S. Second, perhaps as a result of the first point, Indian consumers are comfortable shopping online, including via mobile devices.
“We’re making a bold call for India’s smartphone market. We believe it will triple in size over the next decade to $90 billion and account for 15% of global smartphone shipments by 2032, up from just 6% today. That implies that India alone will drive 100% of global smartphone shipment growth over the next decade,” observed Erik Woodring, Morgan Stanley’s U.S. hardware analyst.
Invesco India ETF (PIN)
PIN follows the FTSE India Quality And Yield Select Index, making it a dividend-based play on Indian equities. That index excludes the 10% of the lowest yielders among Indian stocks and another 10% that score poorly based on quality metrics.
That strategy seems to have long-term durability as PIN, though oft-overlooked in this category, has been around for more than 15 years. Importantly, PIN could be better positioned to capture long-term upside relative to a comparable China ETF.
“Moreover, India's ability to leverage multi-polar world dynamics is a significant advantage. Simply put, India's future looks to a significant extent like China's past, and in this context, it's particularly relevant to note long run trends in exchange rates now show the Indian rupee more stable and actually appreciating whilst the renminbi is depreciating,” according to Morgan Stanley.
https://www.nasdaq.com/articles/the-big-emerging-market-to-consider-if-china-stumbles
Iraq to unblock Telegram app as platform responded to security requirements -statement", 17 AUGUST
ERBIL, Aug 12 (Reuters) - Iraq's telecoms ministry said it will lift a ban on the Telegram messaging app on Sunday, which was imposed earlier this week, citing security concerns and data leaks of official state institutions and citizens.
The app is widely used in Iraq for messaging but also as a source of news and for sharing content.
Some channels contain large amounts of personal data including the names, addresses and family ties of Iraqis.
The ministry said in a statement the decision to lift the ban came after "the company that owns the platform responded to the requirements of the security authorities that called on the company to disclose the entities that leaked citizens' data."
The company also "expressed its full readiness to communicate with the relevant authorities...," the statement added.
In response to Reuters request for comment a member of Telegram's press team said that "posting private data without consent is forbidden by Telegram's terms of service and such content is routinely removed by our moderators."
"We can confirm that our moderators took down several channels sharing personal data. However, we can also confirm that no private user data was requested from Telegram and that none has been shared."
Last week the ministry said that the company did not respond to its request to close down platforms that leak data of the official state institutions and the personal data of citizens.
Reporting by Amina Ismail ; editing by David Evans
" Iraq set in 'battle' against dollar smugglers, c.bank governor says", 17 AUGUST
Iraq set in 'battle' against dollar smugglers, c.bank governor says
- Summary
- Iraq trying to crack down on dollar smuggling, including to Iran
- Baghdad faces hard task of balancing Washington, Tehran
- Banking sector could shrink with new regulations
- Govt, c.bank eye modernizing, digitizing economy
BAGHDAD, Aug 16 (Reuters) - Iraq has made strides implementing U.S. dollar supply restrictions targeting Iran but faces an uphill battle with a banking system unaccustomed to strict oversight and persistent currency smugglers, central bank governor Ali al-Allaq said.
"It is really a battle, because the people benefiting from this situation and those harmed (by the new measures) will try in various ways to continue their illegal activities," Allaq said in an interview with Reuters.
Allaq did not mention Iran by name and said he did not have data on how much of Iraq's dollars been smuggled to Iran or other neighbouring countries, including Turkey and Syria, before the United States tightened regulations in November.
The U.S. measures that aim to enforce sanctions on Iran are a sensitive matter in a country that has often been a front line in the rivalry between Washington and Tehran.
Iraq's government is reliant on Washington's continued goodwill to ensure oil revenues and finances do not face U.S. censure, but it came to power with the support of powerful, Tehran-backed groups and so cannot afford to alienate Iran.
The latter groups have accused the U.S. of meddling in Iraq's internal affairs and creating a currency crisis, as businesses either struggling or unwilling to abide by the new measures sourced dollars from exchange shops, driving down the value of the Iraqi dinar.
Iraq has more than $100 billion dollars in reserves, Allaq said, but could not freely intervene in the market to bring the rate down due to the restrictions.
Last month, the U.S. Treasury Department and the Fed barred 14 Iraqi banks from conducting dollar transactions as part of a wider crackdown on dollar smuggling to Iran via the Iraqi banking system, U.S. officials said.
Allaq said that action related to transfers from 2022, before a new platform that aimed to improve transparency went live. He said the central bank was undertaking a review of the banking sector and introducing new regulations that he said would likely see some banks close.
"It would be very normal in the coming period to see a reduction in the (number of private banks)," he said.
"There are always side-effects, but at the same time we have a responsibility to protect the country's interests by trying to find the necessary means for monitoring and oversight so as not to expose the country to any issues on this front," he said.
'TRANSFORMATION'
The U.S. measures have targeted Iraq's so-called dollar auction, where the central bank requests dollars from the U.S. Federal Reserve before selling them to commercial banks, which in turn sell the funds to businesses in the highly import-dependent economy.
U.S. and Iraqi officials have said the auction allowed large sums of money to be illegitimately acquired by groups who would provide fake invoices and then either transfer or physically smuggle the funds to neighbouring countries, chiefly Iran.
A feature of a highly informal economy, the system was also used by thousands of small businesses that are not registered with the state, Allaq said, a widespread phenomenon in Iraq that allows them to dodge taxes and customs fees.
Since January the central bank has asked banks to provide detailed information on senders and recipients of transfers via an online platform.
When companies began trying to use the platform in January, less than 20% of requests were approved by U.S authorities, Allaq said. That number had now risen to around 85 percent, signalling growing ease with the new regulations, he said.
Allaq said that tighter regulations along with government plans to promote digital payment were forcing a wider shift in the Iraq economy in a country where cash remains king and the majority of adults do not have bank accounts.
"It is not just an electronic platform, it will lead to a total reorganisation of trade and the movement of money, and control on a lot of avenues for suspicious activity."
Reporting by Timour Azhari; Editing by Angus MacSwan
Coffee with MarkZ 08/17/2023
"LOYALTY IS EXCHANGE FOR " HARAM MONEY", 17 AUGUST
Loyalty In Exchange For "Haram Money"... A Phenomenon Perpetuated By The "Authority Of The Parties" And Combated By Integrity Mechanisms
Politics / Localities ||Baghdad today – Baghdad In the past twenty years, corruption has dug deep roots in Iraq, and it cannot be controlled if there is no political will and consensus on that, in light of billion budgets that may not have reflected positively on the general situation in the country.
Corruption In The Iraqi State.
Al-Daami told "Baghdad Today", Wednesday (August 16, 2023), that "with every government formation beginning, political struggles begin over positions, bodies, and special grades, all the way to public directors, and this is unquestionable evidence that it is a struggle over the benefits that the parties and their officials obtain.".
He added, "Some of the benefits of parties and politicians are clear and exposed, while others depend on referring projects at specific rates to the influential parties, but on the other hand, there are those who do not continue in their position if they disagree with the party that adopts them." He pointed out that
"following up on the number of arrest warrants issued against former ministers or their agents, in addition to the rest of the other positions, shows another picture of the extent of corruption," noting that "the Integrity Commission is working well and achieved important results in the last period by opening many files on the names of the corrupt.".
The Roots Of Corruption In Iraq
After 2003, Iraq witnessed a significant increase in the phenomenon of corruption.
Perhaps this is due to the nature of the circumstances in which it lived, especially the stage of the American occupation and the dismantling of the institutions of the Iraqi state, as well as the historical roots of corruption that formed the “first seed of corruption” to grow after 2003 for various and multiple reasons and provided the appropriate environment for the increase in rates of corruption. Corruption and its growing problem.
Integrity Mechanisms In The Fight Against Corruption
The Integrity Commission in Iraq has mechanisms and policies that differ and distinguish it from the rest of the competent authorities in combating corruption, with the presence of many constitutional and legal texts and materials that define the work of the Commission, as well as repeated demands for the Integrity Commission to be the pivotal institution in the Iraqi political system that guarantees the transparency and integrity of the political, administrative and legislative process.
The Integrity Commission is the investigative tool charged with combating corruption, and in turn drew mechanisms and policies in order to reduce the inflated rates of corruption after 2003, which are confirmed by local and international reports, which differ and intersect with each other by specifying a common percentage for the extent of corruption, despite their agreement on the exacerbation of this problem.
Years Of Peak Corruption
Officials’ estimates vary about the value of what Iraq lost as a result of corruption, between 450 to 650 billion dollars after the US invasion of the country in 2003, most of which occurred between 2006 and 2014, in which Iraq witnessed huge corruption crimes, especially in infrastructure projects and those related to the housing and health sectors. Education, roads, bridges, energy and arming the army.
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