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Wednesday, 17 May 2017

What we’re tracking on 17 May 2017

Our borrowing costs are too high and our investment ceiling limited because of aglitch in how a key ratings agency calculates our creditworthiness. That’s our fundamental takeaway from our investigation of the methodology behind Standard & Poor’s credit rating on Egypt. Even if you’re not an economics geek, take a moment to check out the story, which leads Speed Round this morning. The Brits have the luxury of debating whether sovereign credit ratings matter — those of us schlepping along in emerging markets know they do. And if you’re a fellow econogeek and have a strong opinion on the subject, let us know — whether you agree or disagree with our take — by dropping us a line at editorial@enterprise.press.

The central bank will “soon” scrap its USD 100k limit on bank transfers abroad by private citizens, Governor Tarek Amer said yesterday, according to Reuters. “The limits of [USD 100,000] relating to individuals will be cancelled … We have no need for foreign currency limits,” Amer said.

In a further sign that the nation’s USD position is strengthening: International oilcompanies were just paid USD 750 mn to settle part of their arrears and another USD 750 mn is in the pipeline for payment at the beginning of June, Amer told reporters yesterday. Egypt owes the IOCs about USD 3.5 bn. “Amer said separately that Egypt has received USD 8 bn in investment from 150 global investment funds over the past six months,” Reuters reports.

MSCI is adding EFG Hermes to the MSCI Egypt index, while removing Talaat Moustafa Group (TMG), according to Reuters. The wire service says analysts at EFG estimate flows of around USD 30 mn as a result. The MSCI Egypt index includes CIB, Global Telecom Holding, and EFG Hermes, which replaced TMG. Meanwhile, Al Borsa is concerned that the total weighting of Egypt on the MSCI Emerging Market Index is falling, especially after the drop in market capitalisation following the EGP’s devaluation. This is also a concern as the MSCI Emerging Market Index is set to become a bit more crowded, with Pakistan set to be upgraded to Emerging Markets status from Frontier Markets in June and Argentina being proposed as another candidate for reclassification as EM along with China A-Shares.

Start your morning with what Al Mal says is the final draft of the Investment Act. We’re taking it with a grain of salt because it is dated “Monday, 17 May.” The document is spread over two files here and here, both of them pdfs

Top US diplomat on for Mideast to retire? Stuart Jones, the acting assistant secretary of state for the Near East and the former number two at the US embassy in Cairo, is stepping down, Reuters reports. Jones, who we knew during his service in Egypt as a very bright and engaged guy, “told colleagues the decision was his own and that he had not been pushed out or asked to leave the department.” Outgoing ambassador Stephen Beecroft is named by Reuters as one of the candidates to take over from Jones.

Travel in a time of cholera: Heading to Cairo International this morning? Give yourself a few extra minutes of flex: “Cairo airport is introducing emergency measures, including quarantine, to prevent the spread of a cholera outbreak in Yemen by flights arriving from the war-torn Arab nation,” according to an Associated Press piece picked up by Bloomberg.

Jordan’s King Abdullah II is arriving in Cairo today for talks with President Abdel Fattah El Sisi ahead of the Arab Islamic-American Summit kicking off in Riyadh next week, Al Masry Al Youm reports.

Investment Minister Sahar Nasr is heading to KSA today to meet with Saudi investors and officials from the Islamic Development Bank, Al Mal reports.

The greenback is taking a beating amid White House controversies. It’s not going to do much about the EGP:USD rate, but the furor over US President Donald Trump divulging sensitive intelligence to Russia’s foreign minister has been eclipsed by another flap that has sent USD futures and US shares down in Asian trading today. The latest: Former FBI director James Comey claims Trump asked him to shut down an investigation of Trump’s former national security advisor.

A change in our collective attitude could force the economy to grow 34%. That’s how much Bloomberg says Egypt’s economy would grow if as many women were employed as men. The comparable figure for Japan is 9%, and for the US 5%. You can check out Bloomberg’s Modern Motherhood Has Economists Worried or go check out the 2012 report from Strategy& (pdf) (that’s the outfit formerly known as Booz & Company) that makes the GDP growth projection. The 34% bit is on page 9; the section on Egypt runs pp. 106-112.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594). Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2016 Enterprise Ventures LLC.