It’s a busy news day to wrap up the week, ladies and gents. We have a mix of major macro news, with a side of monetary policy for the first course, with some IPO and debt news next, followed by a dessert offering of sports.
THE BIG STORY TODAY- Annual headline inflation accelerated to 4.8% in May from 4.1% in April, largely thanks to an unfavorable base effect and the impact of the commodities boom witnessed since the end of last year. That said, it accelerated at a slower pace m-o-m, indicating the worst may be over. We break down the figures from Capmas in the Speed Round below.
Interest day next week: Expect this to guide the conversation into next week as the central bank’s Monetary Policy Committee (MPC) will meet next Thursday, 17 June to decide on interest rates. The CBE’s monetary policy committee is due to meet on Thursday, 17 June. Look for our poll of analysts on which way the committee will swing next Sunday.
HAPPENING NOW- It’s interest day in Europe as EU keeps stimulus rolling despite a rosier outlook: The European Central Bank maintained the pace of its high-powered pandemic bond-buying program, and said it plans to snap up EUR 1.85 tn in bonds until March 2022, according to a statement. This came despite calls from some policymakers to start tapering down the crisis-fighting policy as the EU recovers from the covid-19 fallout, the FT notes. The Frankfurt-based central bank kept its main operation, marginal lending and deposit rates unchanged at 0.00%, 0.25% and -0.50%.
ECB president Christine Lagarde is due to explain the decision during a press conference later today, and should announce upgraded quarterly economic forecasts for the bloc to reflect a brighter outlook on the back of falling cases and an improved vaccination rate
** CATCH UP QUICK on the top stories from today’s EnterpriseAM:
- FTSE Russell index inclusion could bring USD 4 bn into EGP bonds, believes Finance Minister Mohamed Maait, making the new bond index a significantly more lucrative source of FX than the JPMorgan EM index.
- Corporate bonds can now be traded intraday on the EGX after an FRA decision that aims to boost the secondary bond market.
- Egyptian VC 138 Pyramids will set up a SME-focused PE firm, with EGP 10 mn in initial capital to invest in local SME manufacturers and exporters.
On the diplomacy front, Egypt drums up support from Tanzania over GERD: President Abdel Fattah El Sisi held a call with his Tanzanian counterpart Samia Hassan to discuss bilateral cooperation in infrastructure development, technical support, and trade, according to an Ittihadiya statement. Of course, the Grand Ethiopian Renaissance Dam (GERD) was also a topic of discussion, with El Sisi stressing the need to reach a mutually beneficial agreement as Ethiopia continues on with plans to fill the dam.
Egypt has been helping Tanzania with its own project to construct a hydroelectric dam, dubbed the Julius Nyerere Hydropower Plant and Dam, which is being built by ElSewedy Electric under a USD 2.9 bn contract.
A chance for economic diplomacy? Kenya, Uganda and Tanzania want to borrow at least USD 16 bn to ease covid-related debt burdens, Bloomberg reports. The three countries’ finance ministers will be presenting their FY2021-2022 spending plans today, which should see a combined budget shortfall of USD 16.4 bn. East Africa’s largest economy Kenya’s deficit alone is USD 8.8 bn, or 7.7% of its GDP, as it continues to invest in expressways, ports and railways. Tanzania plans to borrow over USD 4.3 bn, of which half should come from external sources. Uganda is the only country to reduce its planned expenditure by USD 12.6 bn, and is already in talks with the IMF for a USD 1 bn loan to boost its recovery plan. Its debt could approach 50% of GDP by the end of June, Bloomberg cites Moody’s Investors Service.
What about Egypt’s own deficit? Our FY2020-21 budget shortfall is expected to come in at 7.7% of GDP, after which the government expects it to narrow to 6.7% during FY2021-22, according to draft budget figures the Finance Ministry published in April. Debt-to-GDP levels also remain elevated, and are expected to have temporarily increased in recent months due to pandemic financing needs, but should fall in the long-term as authorities continue to implement a debt control strategy that focuses on moving toward longer-tenor borrowing and a long-term reduction in the debt-to-GDP.
YOUR MANDATORY COVID STORY- Abu Dhabi is setting up a new system to allow only vaccinated individuals into public spaces, according to the Emirates News Agency. The Emirate will use the Health Ministry app AlHosn that will indicate a person’s vaccination and PCR validity status through its color-coded system. Only individuals showing a “green pass” will be allowed access to places including malls, parks, supermarkets, restaurants, and beaches. The system will come into effect starting next Tuesday, 15 June.
The first forum of the heads of African investment promotion agencies will kick off in Egypt starting tomorrow in Sharm El Sheikh under the theme “Integration for Growth,” according to a cabinet statement. Ministers and heads of investment agencies from 34 African countries are expected to attend. The forum will run until Monday.
🗓 CIRCLE YOUR CALENDAR-
Entrepreneurs in the tourism sector have until 20 June to apply for the six-month Tourism Recovery Program launched by Enpact and the TUI Care Foundation and supported by GIZ, according to a press release (pdf). Some 100 startups will be eligible for direct support to the tune of EUR 9k each. The program also aims to create an international network of tourism business to expand cooperation between Egypt, Germany, and other European countries. You can apply here.
🚙 FOR YOUR COMMUTE-
BTC bears kind of have it over BTC bulls: A so-called “futures backwardation” — where spot prices exceed futures prices — has returned to the bitcoin market in recent weeks, suggesting that the token might not recover as strongly as the bulls had hoped, JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note cited by Bloomberg. Bitcoin jumped some 14% in the past two days after a tumultuous May that saw it lose some 74% of its value following a record boom earlier in the year. But backwardation is reason for caution, and signals weak demand from institutions, the JPMorgan analysts said. Bitcoin’s shrinking market share of the crypto market, which is now 42% after having topped 70% at the start of 2021 is also another worrying sign, they add.
The Institut du Monde Arabe in Paris is hosting an exhibition titled Divas, from Umm Kulthum to Dalida (D'Oum Kalthoum à Dalida) that will run from 19 May to 26 September. The exhibition will feature personal objects, stage dresses, period photographs, extracts from films or concerts, and rare interviews and film posters for huge Arab female icons including Fairuz, Laila Mourad, Samia Gamal, Souad Hosni, Dalida, according to Yahoo News. Curators Hanna Boghanim and Elodie Bouffard travelled the Middle East for three years to collect the pieces that will be displayed. The exhibition will have a section dedicated to Umm Kulthum and her political and musical influence on the region.
📺 ON THE TUBE TONIGHT-
Netflix Original film Awake has dropped on the streaming site, chronicling a global event that wipes out people’s ability to sleep. The sci-fi thriller has been likened to Sandra Bullock’s Bird Box, only better, according to CNET. The main character Jill (played by Gina Rodriguez) is an ex-military mother who lost custody of her kids due to a few misdemeanors. However, when the no-sleep plague hits the world and everyone gets more than a little cranky, turning murderous at times, Jill runs away with her children to try and survive. NBC News and the New York Times are out with reviews.
⚽ In case you actually do live under a rock, the Euro 2020 will be kicking off tomorrow at 9pm CLT. We breakdown everything you need to know before the tournament in today’s Sports.
🥩 EAT THIS TONIGHT-
Some contemporary mediterranean cuisine to tickle your fancy: Alle Botti Restaurant in Heliopolis has all the household favorites such as mombar, kofta, and stuffed quails — created with a fusion of modern tastes and styles. The dual-identity Merghany joint also features international cuisine on its menu, from Dutch veal to all sorts of pastas. We recommend their muhammara mignon tartlets, shish barak, and hummus. For dessert get a heaping plate of apple kunafa or their classic mini eclairs. Pro tip: there’s an olive tree at the front of the restaurant that we have previously snacked on while waiting for a spot.
🎤 OUT AND ABOUT-
There are not one, not two, but three film festivals coming up this month:
ALSO- The Caravan Troupe is performing the play Lungs tonight at the GrEEK Campus in Downtown Cairo at 7:30pm.
Soul Trains are having a Bruno Mars tribute night at Cairo Jazz Club in Agouza tonight at 9pm.
💡 UNDER THE LAMPLIGHT-
Immortality might be right around the corner: Harvard Scientist David Sinclair believes that modern science can reverse the effects of aging, outlining his research on genetics and longevity in his book Lifespan: Why We Age―and Why We Don't Have To. Along with co-author Matthew D. LaPlante, the duo explain recent advances in genetic reprogramming that could allow people to not just feel younger, but actually become younger. The science is coupled with lifestyle habits that have been proven to extend lifespans and health such as intermittent fasting, cold exposure, exercising with the right intensity, and eating less meat. The book introduces a novel perspective on aging, while suggesting that “the disease” of aging is treatable with the right approach.
☀️ TOMORROW’S WEATHER- It’s going to be a hot weekend, folks. The mercury will be at the 38-39°C range for Friday, Saturday and Sunday, while the nights will cool down to 22°C, our favorite weather app tells us.