PM — Say hello to mind-reading chips

Good afternoon, wonderful people, and a very happy almost-THURSDAY to us all. It’s a relatively calm day on the news front here in Omm El Donia as we push through to the weekend.

The private sector will be off on Saturday in observance of the 23 July Revolution, according to a Manpower Ministry statement. This follows an announcement frp, Cabinet yesterday on Saturday being a national holiday for both the public and private sector. The announcements mean that the government will not be pushing the holiday to a weekday, as has been usually the case since 2020 with most mid-week holidays.

THE BIG STORY TODAY

We’ll know the fate of Chimera’s bid for Beltone within two weeks: Beltone Financial has until Wednesday, 3 August to come to a decision on Chimera Investments’ bid to acquire up to 90% of its shares, according to an EGX announcement (pdf) today. This comes a day after the Financial Regulatory Authority greenlit Chimera’s offer, which will trigger an MTO.

THE BIG STORY ABROAD

It’s a whole lot of Russia and energy in the international business press this afternoon: Russian President Vladimir Putin said Moscow would stick to its commitments on natural gas deliveries to Europe yet warned that Russian supplies sent through the biggest pipeline to Europe, Nord Stream, could dwindle further, the Wall Street Journal reported him as saying. Despite the reassurance, Putin said that deliveries might be slashed by around 20% by next week if a pipeline turbine undergoing maintenance in Canada isn’t returned soon. Gazprom had already slashed gas exports through the pipeline to 40% capacity last month, blaming sanctions imposed by Canada on the failure to return a turbine Siemens Energy was repairing there.

The EU already has a contingency plan in mind: The EU Commission is suggesting that member states (voluntarily) slash their gas use by 15% over the coming months to accommodate for a Russian natural gas cutoff, AP reports. The Commision could move to impose mandatory cuts when there is a substantial risk of a severe gas shortage or exceptionally high demand.

Also getting lots of play abroad: UK inflation jumped to a new 40-year high of 9.4% in June, with the accelerating pace driven by rising global food and energy prices, data by the UK Office for National Statistics showed. New inflation figures are expected to give room for a rare 50 bps interest rate hike by the Bank of England next month, according to Reuters.

HAPPENING NOW-

Egypt-Serbia Business Council gets down to business: Ramping up investments and trade relations between Egypt and Serbia were the top agenda priorities President Abdel Fattah El Sisi touched on during the inaugural meeting of the Egypt-Serbia Business Council, according to an Ittihadiya statement. The two countries are also finalizing a double taxation treaty, Serbian President Aleksandar Vucic said.

El Sisi and Vucic also discussed the ongoing war in Ukraine and its impact on food and energy security, according to a separate Ittihadiya statement.

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** CATCH UP QUICK on the top stories from today’s EnterpriseAM:

• Upmarket real estate developer SODIC has said it will not revise its offer price for up to 100% of Madinet Nasr Housing and Development (MNHD) without getting the green light to conduct due diligence on the company.
• Chimera is one step closer to acquiring Beltone: Chimera Investments’ bid to acquire up to 90% of Beltone Financial is poised to go through after getting the Financial Regulatory Authority’s (FRA) stamp of approval.
• Bye, Alexandria: Cairo-born mass transport app Swvl has suspended all its routes within the city of Alexandria as part of ongoing efforts to cut costs.

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The national dialogue board is set to meet again before the end of the month, marking its third meeting since the board convened earlier in July, dialogue general coordinator Diaa Rashwan said at a presser last night. The board refrained from setting a specific date for its upcoming meeting in efforts to give its members time to discuss the issues brought up. The third meeting will see the board decide on heads and members of the three political subcommittees it agreed on during yesterday’s meeting.

IDG to host cultural festival with sustainable waste in focus at Alamein: Our friends at Industrial Development Group (IDG) are hosting a cultural festival at their eco-sustainable industrial park, e2 Alamein, on the North Coast, according to a statement (pdf). The “Locale” festival, which IDG is hosting in partnership with Art d’Egypte, will showcase nine art installations made with recycled materials to raise “awareness around waste management and encouraging waste prevention, reuse, and recycling behavior.” The event launches this Thursday, 21 July and runs through the summer.

Calling tech startups: Universities of Canada in Egypt-based incubator DMZ Cairo has opened applications for its second eight-month incubation program for tech startups, which begins in November, according to a statement (pdf). The incubator — which is backed by the Academy of Scientific Research and Technology and the National Technological Incubators Program — is accepting applications for the cycle until 29 September.

Further afield, leaders from across Africa are scheduled to convene in Washington for the US-Africa Leaders Summit from 13-15 December. The summit will bring together leaders to discuss pressing matters including food security and climate change, according to a White House statement.

☀️ TOMORROW’S WEATHER- Expect a daytime high of 39°C tomorrow before the mercury falls to a more manageable 22°C at night, our favorite weather app tells us.

Lottery-like investing behavior is the youths’ preferred flavor: Speculative financial products — like crypto, NFTs and meme stocks — are growing more popular among younger generation of investors, as the promise of big payouts becomes more lucrative than the (now fading) idea of financial stability, the Financial Times reports. The current global financial backdrop — marked by soaring housing prices, stagnant wages and rising inflation — have discouraged DIY traders in the under-40 age bracket from taking traditional investment routes that offer little return on investment, pushing more and more people towards riskier, more anti-establishment investments that seem to operate on their own sets of rules. “The idea that the mainstream economy is trustworthy, more so than these other [assets], is kind of dubious in recent experience,” a professor of social and cultural analysis at NYU tells the salmon-colored paper.

Young investors don’t mind the risk — even though crypto just went through a crash: Rising debt levels and lower levels of returns have fundamentally changed people’s relationships with risk, experts say. Young investors are now more likely to treat speculative assets as lottery tickets, the FT says, approaching them with the notion that while they could be worthless, the gamble could pay off. “A lot of people view it like they can’t afford not to,” one young investor says. “I think they’re running out of hope.”

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Mind-reading chips have officially arrived: Brain-computer interface startup Synchron implanted its first device into the brain of an ALS patient in New York earlier this month, Bloomberg reported. This is the first US clinical trial of a brain implant that can help severely paralyzed patients communicate by using their thoughts to send texts and emails. The 1.5-inch device has already been implanted in four people in Australia, who have since been able to send WhatsApp messages and shop online — with no reported side effects so far. Synchron has now overtaken Elon Musk’s Neuralink, which is yet to receive FDA approval (Synchron got the regulatory greenlight to begin human trials in July 2021). Neuralink is a neural interface technology that Musk plans to embed in brains to enhance human intelligence in an increasingly AI-driven world.

???? ON THE TUBE TONIGHT-
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The story of the US’ only unresolved commercial airline hijacking: On Thanksgiving Eve 1971, a man smartly dressed in a suit, tie, and black sunglasses bought a one-way ticket to Seattle under the name Dan Cooper. After boarding the plane, he claimed to have explosives in his briefcase and managed to hijack the flight (without harming any of the passengers or the crew) after demanding USD 200k. The hijacker parachuted off the aircraft with the briefcase carrying the money, disappearing without a trace — 50 years later, the FBI is no closer to finding out his real identity or fate. Netflix documentary D.B. Cooper: Where Are You?! Dives into the (still unsolved) case, exploring top suspects and theories that have been put forth.

The case has amassed plenty of attention over the years, with books on the topic published, podcasts dedicated to solving the case, and characters and situations inspired by Cooper appearing in films and shows.

⚽ Still no football today, folks.

???? OUT AND ABOUT-
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Noha Fekry takes the Jazz Bar stage tonight at 9:30pm at Kempinski Nile Hotel.

Show off your karaoke chops (or make everyone’s ears bleed) at Room New Cairo’s Karaoke Night tonight and tomorrow at 8pm.

The Egyptian Center for Culture and Arts – Makan is hosting the all-women group Mazaher at 8pm. Mazaher are the the last remaining Zar practitioners in Egypt, drawing inspiration from the Egyptian, African, and Sudanese styles of Zar music.

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Growing up in Egypt as an Italian-American Jew: Out of Egypt is a 1994 memoir written by Italian-American writer André Aciman, who is best known for his 2007 novel Call Me By Your Name, which was adapted into an Oscar nominated film in 2017. Aciman grew up in Alexandria in an affluent Jewish family. His childhood memories of growing up in the coastal city and time spent with his family and the wider Jewish community paint a picture of the once-thriving cosmopolitan port that was home to a large expatriate population. He details his family’s move from Italy to Turkey then to Egypt in 1905, long before he was born. His memoir recounts how various eccentric family members made and lost their fortunes, their contempt for the Arabic language (preferring to speak French, English, or Italian), and how they hid their Jewish identities amid the rising anti-Semitism that eventually led them to flee to Paris in the early 1960s.

EARNINGS WATCH-

Gold miner Centamin’s revenues rose 17% y-o-y in 2Q2022 to USD 207.2 mn, with revenues brought up due to higher gold sales and a marginally higher realized gold price, according to its earnings statement (pdf).

Centamin-operated Sukkari gold mine in Egypt saw a good quarter: Production at Sukkari for 2Q 2022 rose 11% y-o-y. Centamin received USD 13.0 mn in profitshare payments from Sukkari, but the group recorded a USD 2.4 mn negative cashflow after profitshare distribution “due to the continued investment in waste stripping and other capital projects.”

What they said: “Sukkari delivered the planned increase in production during Q2 2022 and we remain on track to meet full year production and cost guidance. Q2 2022 was the first full quarter of underground owner operations at Sukari following the transition from contractor operations during Q1 2022 and the Sukari team delivered significant improvements in both productivity and costs,” Centamin CEO Martin Horgan said.

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The EGX30 rose 0.9% at today’s close on turnover of EGP 896 mn (7.7% above the 90-day average). Local investors were net buyers. The index is down 23.7% YTD.

In the green: Ibn Sina Pharma (+6.8%), Fawry (+6.3%) and e-Finance (+6.2%).

In the red: EFG Hermes (-2.2%), Orascom Development Egypt (-1.1%) and Eastern Company (-1.0%).

Enterprise Explains: Passive investing. Passive investing has exploded in popularity in recent years as more retail traders pile into the market in search of easy gains. Worldwide inflows into exchange-traded funds (ETFs) — one of the most common passive investment tools — reached a record USD 1.22 tn last year, pushing global ETF assets to nearly USD 9.5 tn, which is more than double where the industry stood just three years ago.

But what’s passive investing, you ask? A passive fund is an investment vehicle that tracks the value of an asset. Index funds follow the ebbs and flows of a specific stock index, and are one of most popular approaches to passive investing. They work by purchasing shares in all of its companies in a given index, say the S&P 500 or the Dow Jones. Doing this means that when the value of the index rises and falls, the value of the fund follows it. Unlike with an active fund, passive funds don’t require a manager to pick and choose securities and do the research. This means lower fees, making them a whole lot cheaper to invest in.

It sounds simple, but there’s more to it: Passive investing is really a long game. When you own small pieces of thousands of stocks, you earn your returns by cashing in on the upward trajectory of companies’ gains over time, and this might require patience — and sticking through some setbacks and downturns. Passive investing isn’t limited to stocks, either: you can passively invest in commodities, bonds and currencies via ETFs.

The difference between ETFs and index funds: While both are commonly used passive investment tools, there are some key differences between both. The biggest one is that index funds are traded once at the close of each trading day, whereas ETFs can be traded at any point throughout the day, offering a degree of flexibility — and liquidity — for investors. With ETFs, an investor has to rely on someone buying their shares when they decide to sell, whereas with index funds, you’re guaranteed a sale at the end of each trading day — though you have less control over the share price you’re selling at.

There are downsides to passive investing during times of economic turmoil: Given tracker funds passively track an entire index, there’s no room for hedging by buying different stocks when financial markets go sideways. If the market falls, you fall with it. If you’re in it for the long haul, you may overlook these slumps for longer-term returns, but for someone looking for easy, fast gains, they might choose to run for the hills before bearing any more losses.

Still, history is on passive investment’s side: Historically, passive investments have earned higher returns than active investments (at least, in the long term). Over a 20-year period, about 90% of index funds tracking companies of all sizes outperformed their active counterparts, according to a 2020 S&P Indices Versus Active (SPIVA) report. Even over a three-year period, more than half of index funds outperformed active ones.