PM — Not another Ever Given

Good afternoon, wonderful people. We’re quickly getting back in the swing of things after back-to-back long weekends and the news cycle is picking right up.

THE BIG STORY TODAY

Cabinet announces budget cutbacks to tamp down on spending: Prime Minister Moustafa Madbouly has issued a directive to all ministries, with the exception of a few “essential” ones, to rationalize internal spending and limit spending on some national projects, according to the Official Gazette. Under the new measures, ministries and their relevant authorities will have 21 days to submit reports detailing the portion of the budget they intend to rationalize and freeze until the end of the fiscal year.

Not another Ever Given: A cargo vessel that briefly ran aground in the Suez Canal earlier this morning has been refloated, shipping agency Leth Agencies announced in a tweet. The 225-meter MV Glory, which was sailing to China from Turkey, was refloated by Suez Canal Authority (SCA) tugs, the agency said.

Technical failure to blame: The M/V Glory which ran aground while joining a northern convoy near Al Qantarah suffered a “sudden technical failure” when it was 38 km into its journey northwards through the waterway, SCA chairman Osama Rabie said in an earlier statement. Shipping navigation was not affected, he stressed, with the M/V Glory being towed by the authority’s tugboats. The cargo vessel’s brief incident got coverage from most foreign media outlets: Bloomberg | AP | Reuters | CNBC

Flashback 2021: The Suez Canal was blocked for nearly a week after the 400-meter Ever Given ran aground, blocking the vital global shipping lane and disrupting shipping traffic. The SCA was successful in refloating it days later, reaching a compensation agreement months in July 2021 with its operators and allowing it to depart after settling a three-month dispute on who was to blame for the incident. Since then, similar yet minor incidents have occurred.

THE BIG STORY ABROAD

Brazil’s riots continue to lead the conversation in the international business press this afternoon, with riot police deployed to Brasilia’s streets arresting hundreds of people after they stormed the country’s Congress building last night. The rioters were protesting against what they claim are rigged election results, which saw returning president Luiz Inácio Lula da Silva defeat rightwing former president Jair Bolsonaro. The story is on the front pages of the Financial Times, the Wall Street Journal, Reuters, Bloomberg, and CNBC.

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

• The newly released 25% certificates of deposit have raked in almost EGP 100 bn in a matter of days — and the two state banks offering them have reportedly secured a major loan to meet local demand for hard currency.
• GASC puts out a fresh international wheat tender: State grain buyer GASC has launched an international tender to purchase 30k-60k tons of wheat on a cost and freight basis for February delivery.
• EGX looks to forge closer ties with Gulf counterparts: EGX officials are reportedly mulling onboarding the EGX to the Gulf’s Tabadul regional exchange hub.

HAPPENING THIS WEEK –

Chinese Foreign Minister Qin Gang will visit Egypt as part of a trip to Africa beginning today, the Chinese Foreign Ministry announced on its website. The trip will see Qin visit Egypt, Ethiopia, Gabon, Angola, and Benin from today until next Monday, January 16, the statement said, without specifying his exact agenda or when he will be landing in each country.

???? CIRCLE YOUR CALENDAR-

The national dialogue will kick off on Saturday, 14 January.

Global movers and shakers will descend on Davos for the World Economic Forum’s annual meetings on 16-20 January.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

☀️ TOMORROW’S WEATHER- We’re in for a sunny day tomorrow after a gloomy couple of days. Temperatures in Cairo will hit 20°C tomorrow during the day before falling to 11°C at night, our favorite weather app tells us.

Fitness fanatics are taking their workouts to the next level with whole-body electrical muscle stimulation suits: The leotard-like EMS suit is meant to work the muscles in much less time than a regular workout through direct skin contact, with some supporters saying the suits can yield the same results in a much shorter time per workout, according to the Wall Street Journal. The suits actually aren’t a new invention — EMS suits were developed some 20 years ago, but companies are now starting to provide the devices for home use, according to sports scientists and entrepreneurs.

So far, research results on EMS workouts are mixed: Although some research suggested that workouts conducted with an EMS suit led to better results in “waist and hip measurements, cholesterol levels, aerobic capacity and other indicators of cardiac health” than those done without stimulation, some scientists still argue that it could lead to muscle damage and burns. Some studies claim that it has a greater positive impact on body composition and reducing fat, while others fought the notion saying that more research is needed to affirm the benefits, according to the WSJ. Moreover, in Europe, many studies have tracked traces of “serious medical conditions, including at least seven cases of rhabdomyolysis, and worn out muscles that have released damaging substances to the heart and kidneys.”

Say hello to the latest work trend: Fun, unconventional job titles. Traditional job titles are evolving with the times in many industries — especially creative ones — as companies look to broaden some roles while portraying a modern, progressive company culture, BBC reports. New titles like “chief visionary officer,” “chief innovation evangelist” and “business development guru” have been cropping up across sectors, as recruiters look to rebrand jobs in hopes of attracting fresh talent, especially during a tight labor market, Pawel Adrjan, director of EMEA economic research at hiring platform Indeed, tells BBC. The new, flashy job titles can also help make employees feel more valued due to their specificity, Adrjan said. Some aspects of job titles also reflect the evolving nature of work, as in the case of “people” replacing “human resources,” and “talent acquisition” replacing “recruitment” — which are all signs of work lingo becoming more sensitive and respectful of workers.

But some say these new titles can be dangerous: Nontraditional titles can be vague and ambiguous, which can offer little guidance into what employees’ roles entail, Adrjan said. They can also hinder workers’ ability to find new roles that suit them, and can prevent recruiters — who are usually searching for specific titles — from finding them, he adds. This could, in the long run, affect equity and diversity in recruitment, which needs “clear career ladders, pathways and salaries,” Adrjan warned.

It’s shaping up to be another year of supply chain bottlenecks: Port workers all over the world have been speaking out against their unchanging wages despite rising inflation hitting food and fuel prices — hurting already fragile global supply chains, Bloomberg writes. Most recently, there was a nationwide strike of port administration employees in Portugal, which is set to last until the end of the month. Last year saw over 38 port disturbances on the back of employee protests or strikes, up four times from the 2021 figure, according to maritime security consultancy Crisis24. “Labor unrest is unlikely to decrease going into 2023, and may in fact worsen in the likely event that global economic conditions do not improve,” Bloomberg quotes a Crisis24 spokesman as saying. This comes as global supply chains continue to feel the heat from covid-19 and its new variants, which is giving employees the upper hand when negotiating their contracts.

???? ON THE TUBE TONIGHT-
(all times CLT)

The series premiere of Egypt’s version of Shark Tank kicked off with a bang with two startups giving up significant stakes in their companies in exchange for funding. The local version of the hit TV show showcases entrepreneurs pitching their projects and products to a panel of accomplished businessmen and investors (sharks) with the aim of securing an investment. The sharks: Egyptian Chinese Drilling Company founder Ayman Abbas; President and CEO of El Sewedy Electric Ahmed El Sewedy; Chairman and CEO of Mobica Designs Mohamed Farouk; founder and CEO of online shopping platform MITCHA Hilda Louca; co-founder and CEO of Infinity Solar and Managing Director of McDonald’s Egypt Mohamed Ismail Mansour; and CEO and managing director of Madinat Nasr for Housing and Development Abdullah Sallam. The first episode featured a diverse group of companies vying for funding: Health food startup Country’s, Habu Arts, a handmade Alabaster home accessories producer,virtual commerce platform StepInside, and poultry agritech/fintech platform Dajin. New episodes air every Saturday at 9pm exclusively on CBC and WATCH IT.

⚽ It’s a relatively quiet day for football after quite the eventful weekend, just a few games scattered across several leagues: Arsenal face off against Oxford in the FA Cup at 10pm.

La Liga: Athletic Bilbao play Osasuna at 10pm.

Serie A: Verona plays Cremonese at 7:30pm then Bologna faces Atalanta at 9:45pm.

Gulf 25: The second round of the group stage of the Arabian Gulf Cup kicks off today with a match between Oman (1 point) and Yemen (0 points) that begins at 3:15, right as we’re dispatching. Saudi Arabia (3 points) collides with Iraq (1 point), the tournament host, at 6:15pm.

???? OUT AND ABOUT-
(all times CLT)

Catch a screening of El Bab El Akhdar, written by the late Egyptian screenwriter and journalist Osama Anwar Okasha followed by a discussion of the film, at 7pm at Psycho Space in El Nozha.

Get reintroduced to Egyptian director Khairy Bishara’s 80s-90s neo-realist films at Zawya tonight at 7pm.

???? UNDER THE LAMPLIGHT-

Mom shaming at the hands of the state unfolds in Jessamine Chan’s debut novel, The School for Good Mothers. The novel illustrates a not-so-farfetched world in which the state had a Big Brother-ish institution that measures mothers’ devotion to their children. The story follows Frida Liu, a 39-year-old Chinese-American writer and single mother. Liu’s 18-month-old daughter, Harriet, is taken away from her after a series of bad decisions and sleep deprivation lead to her leaving Harriet home alone for a couple of hours unattended. Liu is placed under home surveillance but when she fails to demonstrate to a judge during her supervised visits with Harriet that she’s learned her lesson, she’s sentenced to five years at a new facility. At the facility — which is part school, part prison — Liu has to demonstrate that her maternal skills and instincts have improved by caring for a robot girl the same age as her daughter. If she fails, her parental rights will be terminated.

The EGX30 rose 0.6% at today’s close on turnover of EGP 2.77 bn (73.3% above the 90-day average). Regional investors were net sellers. The index is up 10.3% YTD.

In the green: Qalaa Holdings (+6.3%), Credit Agricole Egypt (+3.7%) and CIB (+2.2%).

In the red: Juhayna (-3.2%), GB Auto (-3.0%) and CIRA Education (-2.2%).

Last year was a tough one for emerging markets. What will 2023 bring? Emerging markets had a rough ride last year. Aggressive monetary tightening led by the US Federal Reserve combined with inflation and commodities shocks to bring currency woes, losses in stocks and bonds, and even debt defaults for some EMs. With economists still warning of global recession threats around the corner, what does this year have in store for already struggling EMs?

The bulls are gaining strength: Things may have seemed bleak for many EM countries lately, but optimists have not been deterred by the trials of 2022. In fact, their ranks are swelling: Rising positive sentiment during 4Q 2022 led to bulls outnumbering bears on EM assets for the first time in 1.5 years by December, according to an HSBC poll picked up by Reuters. Of the 118 institutional investors surveyed, 29% said they were bullish on the asset class over the next three months, almost double the number in the previous survey in September. Investors harboring a bearish outlook fell to 18% from 41% previously.

The state of EM debt: In 2022, 25% of EM countries and more than 60% of low-income nations were on the edge of debt distress, while Sri Lanka and Ghana were among EMs that fell off that edge and into default. Many EM countries looked to alternative forms of debt relief amid tough times last year, including borrowing from private banks or non-governmental sources — which entails serious drawbacks from shorter payback times to higher interest rates and difficulty in negotiating or rescheduling payments. That said, “there's not actually a lot of debt maturing next year,” one EM analyst tells Reuters, adding that Pakistan is the country “probably most at risk” of a 2023 default.

A softer USD? With the Federal Reserve poised to slow — and perhaps even halt — its tightening cycle, the greenback should weaken further this year following a surge in 2022, writes Lisa Shalett, chief investment officer at Morgan Stanley’s wealth management unit. This will provide much-needed relief to EM countries whose currencies and debt positions have come under pressure from the stronger USD. That said, any recovery in EMs will be curtailed if persistent inflation forces the Fed to continue raising rates for longer and the greenback remains strong.

China’s re-emergence: The Chinese economy is expected to rebound this year on the back of Beijing’s decision to drop its zero-covid policy. A Nikkei survey of 37 analysts and economists is predicting the economy to grow 4.7% this year, up from 3.0% in 2022, as the government relaxes its strict virus curbs. A pick-up in demand in China will be good news for emerging economies, particularly commodity exporters, for whom China is one of their biggest trading partners. Chinese assets also account for one third of market capitalization in most EM benchmark indices.

Slowing growth: Despite a Chinese rebound, most analysts are expecting GDP in other EM nations to slow in 2023 as a downturn in the US and Europe cancels out rising demand in the east and economies continue to feel the impact of higher interest rates and the spillover effects of the war in Ukraine. JPMorgan is forecasting growth in EM (excluding China) to weaken to 1.8% this year, while S&P Global Ratings recently cut its yearly forecast for emerging economies (excluding China and Saudi Arabia) to 3.8%. “The economic downturns along with the aggressive monetary tightening and geopolitical and commodity shocks that induce them will be temporarily painful in financial and emerging markets,” said David Folkerts-Landau, group chief economist at Deutsche Bank, according to Reuters.

Inflation will remain a problem in many emerging economies this year, though a slowdown in some countries on the back of falling commodities prices will allow central banks — mainly in Latin America — to begin cutting interest rates, according to JPMorgan. “Inflation is expected to remain a problem for central banks in roughly half of the core EM countries. Some EM central banks may start easing next year but most look set to keep rates high for longer,” said Luis Oganes, who heads up currencies, commodities and EM research at the bank.

Ukraine will remain a wildcard: Geopolitical and economic risks emanating from the war in Ukraine will persist. The conflict has already upended global energy supply chains, disrupted food security across the world and triggered a wave of inflation, and the economic impact of an escalation of the conflict or new sanctions on the Russian economy will be unpredictable and potentially severe.

To the polls: Elections are set to take place across EMs, including Nigeria, Argentina and Poland. The upcoming presidential election in Turkey might prove to be the most impactful leadership contest as far as the MENA region is concerned. The president’s personal approval ratings have tanked in recent months as the global economic shocks combined with his unorthodox monetary policy to leave the country dealing with surging inflation and a currency at record lows against the USD.