Egypt’s economic conditions could allow CBE to accelerate easing cycle, fully reverse monetary tightening by 2020 -HC Securities: Improving economic conditions and the anticipated cool-down of inflation once the full effect of fuel subsidy cuts wear off should give the Central Bank of Egypt (CBE) enough breathing room to begin an accelerated easing cycle, HC Securities & Investment wrote in a report (pdf). “We now expect the CBE to accelerate its planned rate cuts, with a possible 100-200 bps cut in 2H19e before another 200-300 cut bps in 2020e, fully reversing the initial 700 bps hike. On our numbers, this should take average [net interest margins] NIMs for banks under coverage to 4.5%-5.0% by 2024e from 5.5%-6.9% over 2017-18.”

Reminder: Capex borrowing won’t pick up until interest rates drop. The investment bank notes that a bank survey found that private businesses are waiting for interest rates to drop 300-400 bps to resume capex borrowing. Our own survey of nine companies across several industries found that businesses are waiting for interest rates to fall within pre-float levels of 10-13% before ramping up capex borrowing.