PM — Adapting to AI

Happy almost-THURSDAY, friends. We’re quickly making our way towards the long weekend, with plenty driving the news cycle at home and abroad.

STILL DRIVING THE CONVERSATION-

It’s Day Three of the World Economic Forum in Davos — and the global “polycrisis” remains the big buzzword. Sessions focused on tech, climate, and investments will end at 7pm CLT. Some of the sessions coming up this afternoon:

• An address by German Chancellor Olaf Scholz at 4:45pm;
• An address by Ukrainian President Volodymyr Zelensky at 6pm;
• A session titled Restoring Security and Peace feat. NATO secretary general Jens Stoltenberg at 6:15pm;
• A session on the Middle East feat. the Saudi and Iraqi foreign ministers and Jordan’s finance minister at 6:30pm.

From our very own: International Cooperation Minister Rania Al Mashat returned to the Davos stage this morning for a session focused on the green transition. She’ll also be back on Friday for a session on development finance.

AND- Planning Minister Hala El Said sat down with Saudi Arabia’s Economy and Planning Minister Faisal Al Ibrahim at Davos to discuss cooperation between Cairo and Riyadh amid the global economic crisis, according to a Planning Ministry statement. Both ministers exchanged viewpoints on the turbulent economic conditions. They also touched on policy-level cooperation between the two countries, the statement said.

The mood has seemingly lifted since yesterday to reveal higher-than-expected levels of (cautious) optimism for the global economy: IMF deputy managing director Gita Gopinath, forecast that we will see “improvements” in the second half of the year and heading into 2024, reports the Financial Times. Gopinath’s remarks signal that the fund is upgrading their economic forecasts ahead of the release of their 2023 World Economic Outlook Update on 31 January. Other participants at Davos also shared optimistic outlooks with China’s re-entrance into the market as Beijing lifts covid-19 curbs.

Although the UN chief has more doom and gloom to share: UN Secretary General Antonio Guterres said the world is in a “sorry state” due to the many “interlinked” challenges that are “piling up like cars in a chain reaction crash,” referencing climate change and Russia’s war in Ukraine, during his message to the forum today (watch, runtime: 42:27). Geopolitical division and global mistrust are hindering efforts to tackle the many crises facing the world, which include inequality, soaring inflation, an energy crunch, supply-chain disruptions and more, Guterres said.

MEANWHILE- As the folks in Davos ruminate over deglobalization and a potential east-west bifurcation, the Financial Times was out this morning with a front-page big read on how Apple might go about detaching itself from China.

HAPPENING NOW-

President Abdel Fattah El Sisi is in Abu Dhabi, where he and Jordan’s King Abdullah II will meet with the leaders of GCC countries to discuss cooperation between the counties, according to an Ittihadiya statement.

THE BIG STORY ABROAD-

Ukrainian interior minister + other top officials die in helicopter crash: Investigations are underway as a Ukrainian State Emergency Service helicopter crashed into a residential area in Brovary city, near Kyiv. At least 18 people, including Ukraine’s Interior Minister Denys Monastryrky and top Ukrainian officials were confirmed dead, and 29 others were injured, the head of the Ukrainian National Police said, according to CNBC. The story is also getting ink from Reuters, Bloomberg, Financial Times, The Washington Post, and The Wall Street Journal.

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

• LSE-listed gold miner Centamin will file to have a 2011 legal challenge against its Sukari mine thrown out following the Supreme Constitutional Court’s decision last week to uphold a law that bars third-party lawsuits against state-investor contracts.
• Green startups get a boost from our friends in the UK: Nine green projects from across Egypt have been chosen to join the Climate Finance Accelerator (CFA) Egypt’s inaugural program.
• STC will have to cough up more for Giza Systems: BPE Partners’ B Investments has increased Giza Systems’ valuation by 7.6% to USD 128 mn after reviewing its working capital and cash balances.

???? CIRCLE YOUR CALENDAR-

The House of Representatives has adjourned until Sunday, 29 January after three days of plenary sessions.

It’s that time of year again: The Cairo International Book Fair will open its doors to the public at the International Exhibition Center in New Cairo on 26 January, according to Youm7. The event, which runs until 6 February, is expected to draw mns of visitors during the two weeks. The book fair has launched a mobile app for the event (get the Android version here.) Meanwhile, Ahram Online is out with a feature on how soaring paper prices have put a squeeze on the publishing industry ahead of the event.

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

☀️ TOMORROW’S WEATHER- Expect temperatures to rise to 23°C during the day tomorrow before falling to 9°C at night, our favorite weather app tells us.

OpenAI’s ChatGPT is wreaking havoc in education + pushing teachers to alter their methods and curricula: Professors and teachers across different levels of education are revisiting their approach to coursework to circumvent students’ potential reliance on new artificial intelligence tools, the New York Times reports. The shift is largely triggered by last year’s release of ChatGPT — an AI tool that uses language generation software to formulate a coherent stream of thought using information available online and produce an essay, lecture, or other forms of writing. In some universities in the US, “professors are phasing out take-home, open-book assignments — which have become a dominant method of assessment in the pandemic but now seem vulnerable to chatbots,” the Gray Lady writes. At the K-12 levels, many teachers and administrators are trying to impose strict controls on the use of the AI tool, including blocking access on their Wi-Fi networks.

Outright bans on the tool seem both unlikely and infeasible: Many educators are starting to accept that ChatGPT is just another technological advancement that they have to grapple with and adjust to, with the expectation that there will be more new tools and technologies in the future that will require accommodation. One university professor speaking to the New York Times, for example, said he is looking to integrate the new AI tool into their lesson plans as a means of furthering in-class discussions.

Meanwhile, OpenAI’s tools are also making changes in the business world: Microsoft — which has already invested some USD 1 bn in OpenAI and is reportedly considering pouring another USD 10 bn into the startup — is integrating some of OpenAI’s technologies into Microsoft’s Azure OpenAI, which is geared towards developers and data scientists, Reuters reports. ChatGPT specifically is “coming soon” to Azure OpenAI, Microsoft CEO and Chairman Sayta Nadella tweeted. The tool has the potential to disrupt the customer service market by enabling the automation of conversations with customers. This automation could reduce costs by freeing up customer service agents to focus on more complex tasks, while also increasing customer satisfaction, Microsoft has suggested.

We’re already starting to see some of these changes take shape in different industries: Microsoft has already announced it expects to roll out the incorporation of ChatGPT in its search engine, Bing, before the end of March, sparking concerns at Google that the AI tool could upend the competitive playing field, Business Insider reports. Closer to home, a senior official at Al Jazeera reportedly said the news organization is looking into using Azure OpenAI to “summarize and translate content,” according to Reuters.

The Great Resignation is still in full swing: Concerns of an impending recession have done little to slow down a surge in resignations in some geographies, with LinkedIn’s consumer research showing that employees are more confident in their ability to switch careers, CNBC reported. Around 63% of employees in India and 43% in Australia and Singapore indicated they are “more confident” in their search for a new job in 2023 than last year, according to the research, which surveyed over 4k employees across the three countries. They show “more resilience” despite mounting recession concerns. Employees are increasingly looking to leave their jobs due to surging inflation — pushing them to seek positions with a higher paycheck — as well as the pursuit of better work-life balance, with over 30% of those surveyed saying this would be a priority area for them this year. More employees also want to quit their jobs due to a lack of career growth.

???? ON THE TUBE TONIGHT-
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The Last of Us: Finally, a TV adaptation of a video game that gets it right: The HBO series sticks close to the source material — the hit 2013 PlayStation video game developed by Naughty Dog — and is set in a post-apocalyptic America ravaged by a zombie outbreak. The story kicks off 20 years after an outbreak of a fungal infection that turns infected humans into monsters, and follows Joel (Pedro Pascal), a smuggler, as he tries to get 14-year-old Ellie (Bella Ramsey) out of a military quarantine zone. They embark on the brutal journey across the country in hopes that Ellie, who is seemingly immune to the infection, could be instrumental to the development of a cure or vaccine that humans have been holding out for. You can catch the show on OSN — new episodes come out every Sunday.

⚽ The Egyptian Premier League is heating up, with three matches today: Haras El Hodoud are currently on the pitch facing off against El Dakhleya; the score stands at 0-0, as we dispatch. Later this evening, Al Gaish plays Ismaili at 5pm and Enppi plays Future FC at 7pm.

English Premier League: Crystal Palace plays Manchester United at 10pm. After defeating United for the first time in the league since 1991 on the final day of last season, Crystal Palace is vying to snag back-to-back games against United for the first time in their history. United, meanwhile, are unbeaten in five games and will move into second place with a victory, moving above Man City, who they narrowly beat last weekend.

Join the Premier League Fantasy Enterprise League, where we’re seeing fierce competition this season, by clicking here or entering this code: 8o4sut.

Super Cup: Milan faces Inter tonight at 9pm in the Saudi capital, Riyadh.

???? OUT AND ABOUT-
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Maroon 5 tribute Like Jagger and jazz and blues band Hardcase are taking the stage tonight at El Sawy Culturewheel at 8pm.

Fans of retro Arabic music, you’re in luck: Habibi Funk is performing at Cairo Jazz Club tonight at 9pm before Safi takes over later in the evening.

???? UNDER THE LAMPLIGHT-

You can now whip up a 13th century Middle Eastern feast: Best of Delectable Foods and Dishes from al-Andalus and al-Maghrib is a cookbook by Andalusi scholar Ibn Razīn al-Tujībī that includes 475 recipes. It is one of just two surviving cookbooks from the 13th century Muslim-Andalusian world. Although Arabic scholars have long known about the existence of the book, incomplete copies were all that were available until Bink Hallum, an Arabic scientific manuscripts curator, discovered a third and more complete copy at the British Library in 2018 among medical texts. Hallum reached out to Nawal Nasrallah, a US-based food historian who had already begun translating the manuscript from the copies in Berlin and Madrid. Nasrallah spent years translating the complete manuscript before it was released in 2021. The book includes recipes like “Fried Aubergine Slices Simmered in Sauce and Topped with Eggs” and “Zalabiya.”

The EGX30 remained flat at today’s close on turnover of EGP 946 mn (44.6% below the 90-day average). Local investors were net buyers. The index is up 9.5% YTD.

In the green: Oriental Weavers (+3.3%), CIB (+3.2%) and QNB Al Ahli (+3.0%).

In the red: AMOC (-6.2%), Sidi Kerir Petrochemicals (-4.2%) and GB Auto (-4.2%).

Even sovereign wealth funds weren’t spared in the 2022 market sell-off: The value of sovereign wealth funds declined for the first time ever in 2022 on the back of the rout in the global equity and bond markets, according to industry specialist Global SWF’s annual report. Sovereign wealth funds — state-owned investment vehicles that invest in financial assets in pursuit of economic returns — lost USD 1 tn during the year, bringing total assets under management to USD 10.6 tn. Similarly, the value of assets held by public pension funds (PPFs) fell USD 1.3 tn.

A year of historic losses: Global stocks and bonds shed more than USD 30 tn during the year as tightening financial conditions, inflation and the war in Ukraine shocked financial markets. Stocks measured in the MSCI All-World index experienced their largest annual loss since 2008 while USD 9.6 tn was wiped off the value of global corporate and sovereign debt, according to a Bloomberg index.

Hedge funds were in vogue as state-owned investors sought diversification: With stocks and bonds in simultaneous decline, sovereign investors sought safety in hedge funds which managed to outperform financial markets even as they nursed their heftiest losses since 2018. Sovereign wealth and public pension funds raised their average allocation to hedge funds to a record high of 2.0% last year, and accounted for around 25% of all investments in the industry, according to Global SWF estimates.

The market turmoil didn’t stop them investing: Despite shrinking in size, the industry still managed to increase investments by 38% y-o-y to USD 152.5 bn. Dealcount, though, slipped 16% to 747 during the year as funds moved away from venture capital towards megadeals — investments over USD 1 bn per fund — in a bid to deploy large amounts of capital rapidly.

Gulf funds were the “white knights” of the lot: Buoyed by rising oil prices, wealth funds in the Gulf outperformed those in other areas of the world. Together, they doubled their annual spend to USD 89 bn in 2022, according to data from Global SWF picked up by Bloomberg, with USD 51.6 bn of that heading to Western economies. They were also involved in almost half of the 60 megadeals closed during the year. Abu Dhabi’s ADIA made the largest investment, pouring USD 4 bn into ASF IX, a fund run by France-based private equity investment firm Ardian, and USD 2 bn for joint investments.

Five of the 10 most active sovereign investors of 2022 hail from the Gulf: Singapore’s GIC topped the list with USD 40.3 bn worth of capital deployed, followed by the Abu Dhabi Investment Authority (ADIA) and Saudi Arabia’s Public Investment Fund (PIF), which invested USD 25.9 bn and USD 20.7 bn respectively. Also in the top 10: Abu Dhabi’s Mubadala, ADQ, and the Qatar Investment Authority (QIA). The four other spots were occupied by Singapore’s Temasek and Canada’s CPP, CDPQ, and OTPP.

And they’re not going anywhere, with the pressure only rising on Gulf wealth funds to deploy their funds: With more than USD 3.5 tn in assets — an amount larger than the UK’s GDP and more than 8x Egypt’s economic output in 2021 — Gulf sovereign wealth fund authorities are under pressure to use their funds to diversify their economies and wean themselves off of oil, the business information service quotes people familiar with the matter as saying. PIF has fallen short of its commitment to spend some USD 40 bn a year by 2025 two years in a row now, the sources told Bloomberg.

But the politics of investing is growing more complicated: The delicate politics embedded in Gulf sovereign wealth funds’ investments are making it harder for dealmakers to lock in their investments, with some decisions often requiring the greenlight from the ruling sheikhs, the sources said. The funds are trying to invest more strategically and inject their money into what helps drive their nation building goals forward, they added.

What’s next? Global SWF estimates that assets managed by sovereign funds will grow from today’s USD 10.6 tn in assets under management to USD 17.3 tn by 2030. Public pension funds, on the other hand, are expected to grow from USD 20.8 tn to USD 33.2 tn by 2030. It also expects sovereign investors to downsize their bond portfolios and invest more capital in private credit and hedge funds over the next few years, and forecasts increased activity from Gulf funds in global markets.