PM — Make the In Between count

Happy Monday, wonderful people. It’s already been a busy start to the week, and we have a sneaking suspicion we’re not going to see things slowing down much over the next few days.

THE BIG STORY TODAY

Blinken talks Palestine-Israel conflict with El Sisi, Shoukry: US Secretary of State Anthony Blinken discussed the escalating tensions between Palestine and Israel during a meeting earlier today with President Abdel Fattah El Sisi, according to an Ittihadiya statement. Blinken — who arrived in Cairo yesterday and is likely en route to Israel as we hit dispatch on this afternoon’s issue — reiterated Washington wants to work closely with Egypt to help restore calm following several days of airstrikes from Israel and attacks from Palestinian citizens. Blinken also sat down with Foreign Minister Sameh Shoukry for a separate meeting to touch on Egypt-US relations, alongside developments in Sudan and Libya, Reuters reports.

Expect Blinken’s visit to drive the conversation on Egypt in the press for the next few days: Blinken’s arrival in Cairo in the midst of escalating tension between Israel and Palestine has already got a lot of ink in the foreign press, with Reuters, Haaretz and the National all giving space to Egypt’s longstanding role as a mediator between Palestine and Israel.

THE BIG STORY ABROAD

Adani meltdown continues: The massive sell-off of Adani Group’s shares following blistering fraud allegations has so far wiped nearly USD 72 bn off the stock market value of the Indian coal conglomerate’s flagship company, Bloomberg reports. Shares of flagship Adani Enterprises fell 2% while Adani Total Gas and Adani Transmission plummeted by 20% on Monday. Billionaire Gautam Adani’s 413-page rebuttal to the fraud claims — made last week by US investment research firm Hindenburg Research, which holds short positions in Adani Group — have done little to pacify investor concerns about the corporate governance of his business. The market meltdown coincides with Adani Enterprises’ secondary offering, which was planned to fund green hydrogen projects, Enterprise Climate noted this morning.

The story is still getting front-page play in the Financial Times, the Wall Street Journal, Reuters, and CNBC

Driving the conversation throughout the rest of the week: We’re heading into a series of interest rate hikes. Global central banks are set to bump up interest rates in the days ahead to their highest levels since the financial crisis, the Financial Times reports. The Federal Reserve is expected to raise interest rates 25 bps in its two-day monetary policy meeting tomorrow and Wednesday — pushing rates to the highest levels since September 2007, albeit at a slower pace than the 50 bps hike in its December meeting. Analysts expect the Bank of England (BoE) and the European Central Bank (ECB) to hike rates by 50 bps to their highest since fall 2008.

Remember when “transient” was the word of the day? Investors are worried this means inflation is more persistent than they thought: While slowing inflation spurred hopes that central banks will slow the pace of their rate hikes and caused bond markets to rally this month, price growth is expected to remain above the Fed and ECB targets of 2% in the medium term. Inflation still stands at 6.5% in the US and 9.2% in the EU. “[It] is going to be super difficult again for the Fed to … get inflation down to that magical 2% number without putting us into a recession,” one analyst told the FT. “The credit markets are effectively pricing in a no-recession outcome. But that’s not the consensus base case that most economists are forecasting,” said another.

** TAKE OUR JANUARY ENTERPRISE READER SURVEY and get a chance to have lunch with us: Give us your thoughts on how 2022 panned out for your business and industry, and what you’re expecting in the year ahead in our Enterprise Reader Survey.

We’re asking you to share your expectations on the EGP / USD rate in 2023, how you’re managing expenses amid the rising cost of living, where you see your industry as a whole heading, and whether you expect to make fresh investments — among a few other questions we ask our community on a regular basis. As is our custom, we’ll be sharing the results with all of you in a few weeks’ time to help you shape your view of the year.

You can take the Reader Survey here — it won’t take more than a few minutes to complete.

Want to have lunch with us? Leave your name, email, mobile number, and where you work in the box for “Is there anything else you want to tell us.” We’ll be inviting eight participating readers to breakfast at one of our favorite restaurants.

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

• CIB now owns all of Kenya’s Mayfair: EGX mainstay CIB will acquire 49% of Mayfair CIB for USD 40 mn, giving it full ownership of the Kenyan bank.
• House gives first nod to tourism bill: The House of Representatives yesterday gave its preliminary approval to a draft bill that will strip the power to form and regulate tourism chambers from the Tourism Minister and place it instead in the hands of the Egyptian Tourism Federation.
• UAE accounting startup Wafeq has raised USD 3 mn in a seed round, the company said Wednesday. The round — led by Saudi VC Raed Ventures, with participation from Wamda Capital — will help fund Wafeq’s expansion into Egypt while scaling its services in the Gulf.

FOR TOMORROW-

Sayonara, CDs: The National Bank of Egypt and Banque Misr will pull their one-year 25% certificates of deposit from the market by the end of the working day tomorrow. The high-interest CDs were introduced earlier this month ahead of the devaluation of the EGP. CIB, QNB Alahli and Banque du Caire are yet to announce when they will follow suit, though we expect all the high-yield CDs to be pulled off the market in tandem.

???? CIRCLE YOUR CALENDAR-

It’s interest rate week here at home… The Central Bank of Egypt (CBE) is likely to hike interest rates when it meets on Thursday as inflation continues to run high, according to our interest rate poll.

…And in the US: The Federal Reserve is expected to continue to slow the pace of its interest rate hikes when it holds its two-day policy meeting on Tuesday and Wednesday.

EBRD + EU + GCF are holding a green finance event tomorrow: The European Bank for Reconstruction and Development, the EU, the Green Economic Financing Facility, and the Green Climate Fund will hold a green finance event on Tuesday, 31 January at the Nile Ritz Carlton Hotel.

NPH gets more time for Pachin takeover bid: The Financial Regulatory Authority (FRA) has granted a 60-day extension to Dubai-based National Paints Holdings’ (NPH) on its offer to acquire Paint and Chemical Industries (Pachin), according to a statement to the EGX (pdf).

REMEMBER– NPH’s offer of EGP 29 per share for 100% of Pachin is the second highest of five bids to take over the company in recent months. Pachin had been expected to respond to NPH’s offer this month but has not yet done so. The highest bidder at EGP 30 a share, Compass Capital, recently got the nod from Pachin to do due diligence.

We’re still waiting to hear what’s happening with fuel prices this quarter: The government’s fuel pricing committee was due to meet earlier this month to set fuel prices for 1Q 2023. The government has increased prices at the pump by 23-28% since April 2021, and decided on a rare fuel oil price hike last July.

Expect prices to rise: The government has committed to changing local fuel prices in line with movements in the global markets under the USD 3 bn loan agreement with the IMF.

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

☀️ TOMORROW’S WEATHER- Winter will finally be upon us starting tomorrow. Look for the mercury to slide below 20°C for the coming two weeks, our favorite weather app suggests.

Global food supplies continue to grapple with a run of bad luck: International food supplies are still at risk despite recent declines in food prices on international markets, agriculture analysts warn, according to the Financial Times. The most imminent threat is posed by the potential discontinuation of the Black Sea Grain Initiative between Russia and Ukraine, whose renewal upon expiry in March is uncertain. Brokered by Turkey and the UN in July, the agreement has enabled Ukraine to resume its grain exports via the Black Sea after a complete blockade by Russia triggered a food crisis and sent prices rocketing.

Geopolitical tensions and climate change could also hobble supplies: Financial institutions, ins. providers, and transporters have been reluctant to take on business related to the export of Russian food and fertilizers amid concerns of exposure to sanctions — even though many Russian crops and fertilizers are exempt from the EU’s punitive measures. Global crop production is also in for a heat stroke this year, further compounding the issue. Forecasts indicate that 2023 will see the return of the El Niño climate phenomenon, which recurs every few years with a warming effect on the Pacific Ocean’s surface accompanied by extreme weather conditions, such as droughts in some areas and excessive rainfall in others.

EMs are set to face a unique set of hurdles: In developing countries, currencies losing ground to a strong USD could keep domestic costs of food supplies high even as international prices fall. “That means food inflation for consumers is likely to persist for several quarters due to the lag of about a year for internationally traded prices to work their way through to retail supply chains,” the FT says.

New, more advanced solar cell technology that’s been bogged down by setbacks could soon get its day in the sun with new research: High-performing perovskite solar cells (PSC), an emerging photovoltaic technology, could mark a significant advancement in the solar energy field by allowing for more efficient and durable solar panels, according to MIT. However, PSC has several drawbacks, including its high cost, instability, and complex manufacturing — all issues which Chinese-Swiss scientists are looking to address with new research that could pave the way for more widely available and affordable solar energy production. The joint study created a new model using a transparent conducting oxide (TCO) and affordable “metal composite electrode,” which can prevent ion movements and chemical reactions between the metal and perovskite, leading to significant improvements in composite electrodes. The composite electrode-PSCs has created a promising potential for stable and faster PSC manufacturing, increased power conversion efficiency (PCE) by 23.7%, and preserved 95% of the original PCE charge.

Sub-Saharan Africa gets tech fund from impact investor: Private equity firm Convergence Partners raised USD 296 mn to purchase technology assets in Africa, including data centers and subsea fiber optics cables, Bloomberg reports. This capital raise — one of the first private equity funds obtained for sub-Saharan Africa in 2023 — brings Covergence’s total funds under management to about USD 600 mn, according to Chairman Andile Ngcaba.

Narrowing the continent’s digital divide: Sub-Saharan Africa’s population is rapidly growing and is on track to double to more than 2 bn by 2050, according to The Guardian. The continent’s growing youth is increasingly using their phones for services like online banking and shopping. In order to close the gap between those with access to computers and the internet and those that do not by 2023, the continent needs an additional 700 data centers — around USD 100 bn in investment, according to Ngcaba. Convergence wants to contribute some of the funding necessary to address the digital divide, he said.

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

Do therapists need therapy too? Jason Segel stars as Jimmy, a cognitive behavioral therapist who is struggling to grieve his wife’s death in AppleTV+’s comedy Shrinking. Jimmy grows tired of his patients constantly complaining about their problems and decides to try a new approach: Telling the unadulterated truth. He begins letting patients know his unfiltered thoughts and even straight up tells a patient to leave her emotionally abusive husband, which — despite blurring ethical boundaries — he learns is quite effective. Jimmy’s boss, Paul Rhoades, (Harrison Ford), who is grappling with his recent Parkinson’s diagnosis, is less than thrilled at Jimmy’s new technique and isn’t shy about it. The first two episodes of the show are available to stream on Apple TV+ and new episodes come out on Fridays.

⚽ Just four matches on tonight across four leagues:

FA Cup: Derby County faces West Ham tonight at 9:45pm.

La Liga: Villarreal plays Rayo Vallecano at 10pm.

Serie A: Udinese plays Verona at 9:45pm.

Egyptian Premier League: National Bank faces Ghazl El Mahalla at 5pm.

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

Catch a screening of 1991 Egyptian film Al Kit-Kat at Institut Français d'Égypte tonight at 6:30pm.

Saint Mercy takes the stage at Room Art Space New Cairo tonight at 9pm, performing a stripped down live set featuring a few unreleased songs.

???? UNDER THE LAMPLIGHT-

Deceased photojournalist Maali Almeida has just seven nights in the afterlife to find out who killed him: Winner of the 2022 Booker Prize The Seven Moons of Maali Almeida by Shehan Karunatilaka is set in 1980s Sri Lanka amid a civil war. The book’s protagonist wakes up dead in Colombo at the start of the book and is informed that he has just seven days in the In Between. Almeida makes it his mission to lead his friend Jaki and her cousin to the stash of photos he has hidden that expose the ravages of the Sri Lankan civil war. Almedia achieved his career goal of taking photos “that will bring down governments. Photos that could stop wars,” but unless his friends can retrieve and disperse them, his efforts will have been in vain.

The EGX30 fell 2.2% at today’s close on turnover of EGP 2.91bn (66% above the 90-day average). Foreign investors were net sellers. The index is up 16.6% YTD.

In the green: Eastern Company (+4.4%), CIRA Education (+1.0%) and Egypt Kuwait Holding -EGP (+0.2%).

In the red: Telecom Egypt (-7.1%), Heliopolis Housing (-7.0%) and Madinet Nasr Housing and Development (-5.6%).

Deepfakes — where are they now? When the world was first introduced to the concept of “deepfakes” in 2017, every news outlet was quick to warn of the new tech phenomenon, predicting that it would make misinformation even more widespread and harder to debunk. Almost six years later and deepfakes, while never far from the headlines, haven’t exactly triggered the catastrophe that was predicted. So what is the technology being used for now?

First things first: What are deepfakes? Deepfakes use machine learning, AI, and deep learning technology to manipulate visual content, replacing one person’s image with another or adding content to an already existing video. The world was first introduced to deepfakes more than five years ago by a Reddit user of the same username, who shared an NSFW video that superimposed the faces of celebrities on explicit content without their consent, according to AI-focused platform Decoder.

The tech caused an immediate — and justified — backlash: Linked to abuse and misinformation from the start, the spread of deepfake tech has been slowed by concerns from the public, private firms, and policymakers. “Before the alarm was raised on these issues, you had no policies by social media companies to address this … Now you have policies and a variety of actions they take to limit the impact of malicious deepfakes,” AI expert Aviv Ovadya told The Atlantic. Social media platforms have started to look out for deepfakes using content moderation and human and software detection methods.

But the inevitable cannot be stopped, only delayed: Some experts say that despite attempts to control the tech, deepfakes are bound to take off within a few years as AI becomes smarter and more advanced. TikTok, Snapchat and Instagram filters all already integrate some form of deepfake tech to change and enhance images. The website Deepfakes Web allows users to create their own deepfake content. And a number of less advanced applications have popped up allowing users to create GIFs from still images.

Deepfakes are big business on TikTok: A Tom Cruise deepfake Tiktok account by the username DeepTomCruise has accumulated 3.8 mn followers (the account is aiming for parody rather than trying to pass itself off as Cruise.) Cruise not your bag? There are also deepfake accounts for the likes of Keanu Reeves, Harry Styles and Justin Bieber and his wife Hailey.

But deepfakes still have a way to go before they’re interchangeable with the real thing. Although the whole appeal of deepfakes is that they should be identical to the real thing, a study at Cornell University found that people are more likely to detect fake video or audio than they are to identify inaccuracies in written text. Some say that’s because the tech isn’t quite there yet. In one example, viewers of a clip of Ukranian President Volodymyr Zelensky surrendering to his Russian counterpart Vladimir Putin were able to identify the content as fake thanks to Zelensky’s oversized head and questionable accent.

Where do policymakers stand? The World Intellectual Property Organization believes (pdf) that deepfakes have the potential to violate human rights, privacy rights and personal data protection rights, as well as raising questions over copyright and attribution. European laws allow for victims of deepfakes to exercise their “right to be forgotten” if the content shared is inaccurate, under which the content should be erased — though that’s much easier said than done. China, the EU, and several US states have in recent years put out regulation attempting to clamp down on misinformation through deepfakes.

Deepfakes likely can’t be stopped. But improved media literacy could stop us from falling for them. Deepfakes are the latest in a long chain of means to alter or falsify audio, images, and video, all of which have become more common with the rise of the digital age. That makes it all the more crucial that societies double down on teaching media and digital literacy — which helps people identify the sources they can trust, pick up on inconsistencies and inaccuracies in media, and take everything they read, see, or hear with a grain of salt.