It’s been a busy end to an uncharacteristically busy week in August, which usually sees local and international news slow down for the summer. So if you’ve been busy all week, give yourselves a pat on the back and enjoy the rest of your weekend.
THE BIG STORY TODAY- It’s interest rate day, as the central bank’s Monetary Policy Committee is meeting today to decide on interest rates. Expectations are high that the CBE will err on the side of caution and hold interest rates amid global inflationary pressures. All 12 analysts we’ve surveyed expect the central bank to leave interest rates unchanged for the sixth consecutive time. Ditto Bloomberg, whose 11 surveyed analysts also see interest rates unchanged.
Inflation, inflation, inflation: Egypt so far has largely been insulated from the inflationary pressures, with inflation barely moving from 4.3% in January, with the headline urban rate inching up only 60 bps to 4.9% in June, remaining below the lower-bound of the central bank’s 7% (±2%) target range. However, the situation globally has policy makers jittery. Policymakers need to pre-empt heightened food prices stoked by rising international commodity prices, Beltone’s director of macro and strategy Alia Mamdouh told us. Add to that President Abdel Fattah El Sisi’s call on Tuesday that the price for subsidized bread needs to be increased. Inflation figures for July should be out next Tuesday.
The other consideration is, of course, the carry trade. Egypt still has the highest real interest rates among more than 50 economies tracked by Bloomberg. “That ranking has helped raise foreign holdings in Egyptian debt to more than USD 28 bn, important funding while the tourism industry awaits full recovery from the coronavirus pandemic,” the newswire says. However, other emerging-market peers such as Russia, Brazil and Ukraine are tightening policy, potentially competing with Egypt’s debt. Analysts, however, including Simon Williams, HSBC’s chief economist for Central & Eastern Europe, the Middle East and Africa, see no need for Egypt to do the same, according to Bloomberg.
The MPC’s decision should be out by 6pm CLT today. We will have detailed coverage on the decision in Sunday’s EnterpriseAM.
** CATCH UP QUICK on the top stories from today’s EnterpriseAM:
- J&J vaccines coming in next week: Egypt will next week receive its first shipment of Johnson & Johnson vaccines, but individuals who have already received a vaccine dose will not be privy to the traveler-approved jab.
- Dormant bank accounts get new life breathed into them: Egyptian banks will have much less leeway to close dormant accounts under new policies from the Central Bank of Egypt, requiring banks to notify customers with inactive accounts three months before freezing them.
- Speed Medical to list on DFM in 4Q2021: Speed Medical expects to list on the Dubai Financial Market (DFM) in 4Q2021, with plans to complete regulatory requirements in Egypt and Dubai within the next few weeks.
THE BIG STORY ABROAD- Monetary policy remains the big story of global markets, as speculation is rife on when the US Federal Reserve might begin stimulus tapering. That speculation only seems to have intensified following this morning’s announcement from the US Treasury Department that it might begin cutting the size of government debt sales in the fall, as funding needs for covid economic relief is reduced. This would be the first reduction undertaken by the US Treasury in five years, notes the FT. Should the tapering begin, it is anticipated that the reduction in supply of US debt will keep yields steady, notes the salmon-colored paper.
This should keep carry traders on our side of the fence: The Treasury Department announcement comes as the value of the global stock of negative interest rate debt has ballooned to more than USD 16.5 tn — the highest in six months. “While some of the biggest moves have come in the US Treasury market as traders unwind their bearish bets, bonds in Japan and the eurozone — the two main bastions of negative-yielding debt — have also benefited,” notes Tommy Stubbington in the FT. Lower yields in these economies should keep carry traders’ eyes firmly on EMs, and with Egypt showing the highest real interest rate, keep us among the most attractive of EMs.
🗓 CIRCLE YOUR CALENDAR-
Euromoney Conferences is organizing a two-day virtual conference from 7-8 September to talk sustainable finance and investment. Titled “GlobalCapital Sustainable and Responsible Capital Markets Forum,” the online event will feature on day one Vice Minister of Finance Minister Ahmed Kouchouk, who will participate in a live panel discussion on green sovereign bonds. You can register for the webinar here.
The Dokki Book Fair will be held from 5-10 August at the Ebda3 Villa, boasting 1 mn books on sale at this year’s event.
Inflation: Inflation data for July will be out on Tuesday, 10 August.
🚙 FOR YOUR COMMUTE-
SPACs are on the hunt for EM prospects: SPACs have been increasingly looking to emerging markets for companies to merge with, with the number of special-purpose acquisition companies hunting for companies in Asia, Latin America, Eastern Europe, and MENA growing at a faster clip than their conventional counterparts, according to The Wall Street Journal’s analysis of data from SPAC Research. 60 new SPACs focused on emerging markets filed documents with the Securities and Exchange Commission in 1H2021, almost triple the number for all of 2020, while the number of non-emerging-market SPACs grew by about 67% to 515 over the same period.
What countries are gaining traction? The Wall Street Journal names Brazil, Israel and Turkey as hotspots for SPAC mergers, in addition to a number of Asian based companies.
Notably absent from the analysis is Egypt, as mass transportation startup Swvl could soon go public through a merger with US SPAC Queen’s Gambit Growth Capital (a story broken by the WSJ ironically). The move could see the company arguably become the MENA region’s first unicorn and subscriptions to the transaction sees it valued at USD 1.5 bn.
The US is expected to call for half of all vehicles sold in the country to be clean by 2030, Bloomberg Green reports citing senior administration officials and a White House fact sheet. The ambitious goal aims to put more battery-electric, plug-in hybrid or fuel cell-powered vehicles on the streets in the coming years and to urge car makers to invest more into manufacturing them. However, the potential statements were met with reciprocating calls to the government to increase infrastructure spending on EV charging stations nationwide to meet the increased supply of vehicles, especially after it cut the expected spending in half recently.
📺 ON THE TUBE TONIGHT-
OSN’s Beirut Blast: The Story of Warehouse 12 is a documentary retelling the events of last year’s explosion. Through 30 interviews and closeup footage of the event and aftermath, the day is pieced together. The documentary also explores how the incredibly dangerous stock of lethal explosive ammonium nitrate was mysteriously held in the port for seven years — a clear case of government negligence. Beirut Blast shows the emotional side of recent history, with interviewees who felt the situation is reminiscent of the civil war and others who lost homes, loved ones, and hope. You can check out the trailer here (watch, runtime: 00:45).
🏅 TODAY IN THE TOKYO OLYMPICS-
Egypt’s handball team will be meeting Spain on Saturday at 10am to compete for the bronze medal. The Pharaohs had a strong run for the gold, but lost 23-27 to France in the semifinals today.
Wrestler Diaaeldin Gouda Abdelmottaleb will play for the bronze after losing to Geno Petriashvili of Georgia in the men's freestyle 125kg round of 16 event, but qualifying to the bronze medal round after his opponent made it to the final.
Wrestler Amr Reda Hussen could be in the same position after reaching the round of eight in the men's freestyle 74kg and losing to Khazakhstan’s Daniyar Kaisanov. If Kaisanov reahces the finals, Hussen will have a shot at bronze.
Mostafa Amr Hassan claimed 8th place in the men’s shot put finals.
Haydy Morsy finished in 11th place in the fencing ranking round of the women's pentathlon, while Amira Kandil came in 19th. They duo will play a bonus round tomorrow.
Ahmed ElGendy placed 15th in the fencing ranking round of the men’s pentathlon and Ahmed Hamed snagged 21st place.
Karate fighter Ali El Sawy isn’t going to the semis after coming in third place in Group A after four matches today, while the first two advance to the next round.
Karate fighter Radwa Sayed is out of the Olympics after coming in 5th in the women's kumite 55kg Pool B elimination round.
WHAT TO WATCH tonight and tomorrow-
- 3:20am: Habiba Marzouk is competing in the women's rhythmic gymnastics individual all-around qualification round.
- 6:02am: Giana Farouk has four matches to play in the women’s karate kumite 61kg elimination round.
- 7:30: Amira Kandil and Haydy Morsy are up in the women’s modern pentathlon, competing in three rounds tomorrow.
- 8:00am: Mohab Mohymen Ishak will compete in the men’s diving 10m platform preliminary round.
- 10:07am: Abdalla Abdelaziz will play four matches in the men’s karate kumite 75kg elimination round.
- 12:30am: Egypt’s women artistic swimming team will compete in the finals.
🍤 EAT THIS TONIGHT-
Seafood by the sea: Flip is next up in our coverage of Sahel foods you need to try this summer. Specializing in seafood burgers, salad bowls, and wraps, Flip offers a healthy and delicious option to snack on by the beach. Their salmon teriyaki burger and crispy shrimp burger are fan favorites and are great to pair with sweet potato fries. You can also grab one of their light salmon wraps or colorful salads for those who care about their beach bodies. That doesn’t mean they don’t offer sweet delights such as their honey fritters with vanilla soft serve or a fried bites treat of poppin shrimp. You can find them at Stella Sidi Abdelrahman and Hacienda White.
🎤 OUT AND ABOUT-
Zawya Cinema is screening several interesting films and docs this week, including Gaza Mon Amour, The Man Who Sold His Skin, Another Round, and Lift Like a Girl. You can check out their schedule here.
Attend an expressive arts workshop in Sahel by art therapy MA student Nour Elbeblawy. The one day workshop aims to give participants an idea of how different art practices can be used for self expression and self regulation, exploring visual arts, dance and movement, voice and storytelling. The event will be held on 13 August and 20 August at North Coasts’s Beitna 21.
💡 UNDER THE LAMPLIGHT-
The story behind the Abraaj fraud: Private Equity investor Arif Naqvi was not only good at what he did, running Dubai-based Abraaj for years, he was also highly respected by leaders worldwide. From speaking alongside Bill Gates at Davos, winning the support of former President Barack Obama’s administration, and even being considered for a leadership role in his native Pakistan, the world would have never expected the events to come. The Key Man by Simon Clark and Will Louch explores the Abraaj debacle that shook the finance industry, calling it “the true story of how the global elite was duped by a capitalist fairy tale.” In 2019, Naqvi was accused of playing a role in a multi-mn USD fraud, where his firm posted returns that were “fictional”. If found guilty, he faces up to 291 years in jail. The Financial Times is a fan of the book, writing up a great review.
☀️ TOMORROW’S WEATHER- Cairo weather is peaking this weekend, with 43°C and 44°C highs on Friday and Saturday that fall to 27°C and 26°C at night, according to our favorite weather app. Meanwhile, Sahel is at 36°C and 34°C on Friday and Saturday, with the mercury falling to 24-25°C at night.