Good afternoon, ladies and gentlemen, and welcome to your capital markets-themed edition, with local and foreign headlines today being dominated by financial market news.
THE BIG STORY TODAY- Egypt could expect to see up to USD 4 bn of foreign inflows into the bond market in 2H2021 should Egypt’s debt be made “Euroclearable” and make the JPM EM index later this year, Beltone Financial’s chief economist Alia Mamdouh told Bloomberg Daybreak this morning.
In other capital market news, new details have emerged concerning the EGP 1 bn fund-of funds being launched by Egypt’s state-owned banks. For one, the fund will be launched in the fourth quarter of this year, with US-based Avanz Capital having been hired to manage the fund.
Meanwhile, Mubasher Capital appears to be growing its asset management business significantly over the next 2-3 years, with plans to launch 10 debt and equities funds. We have details on these stories in the Speed Round below.
THE BIG STORY ABROAD- Prepare for a turbulent August in the financial markets. August is normally a difficult time in the markets, but this year fears over the delta variant could add fuel to the fire, with volatility markets beginning to flash yellow. The VIX has seen its lows gradually tick up through the month of July and high-yield spreads are becoming “stickier” — two “yellow warning lights” that could signpost trouble ahead, the head of one US research firm has warned, according to Bloomberg.
And that’s not all: Another measure of risk — the S&P 500 Skew — has reached its highest point since the pandemic erupted 18 months ago. The Skew, which compares bullish and bearish options trades, is elevated despite the benchmark index reaching a new record high last week.
“There is worry but we are nowhere near peak worry,” a strategist at the Royal Bank of Canada told the business news information service.
Delta is also messing with oil prices, as the new variant’s impact on demand across the Asia-Pacific region made itself felt in a price drop following two weeks of gains. Brent futures dropped 87 cents to USD 74.54 as of 11:45 AM London time, while US crude lost USD 1 to hit USD 72.95 a barrel, according to Reuters.
Fears over an economic slowdown in China are also driving the selling pressure: Manufacturing activity in China grew at its weakest pace since the start of the pandemic last month due to rising raw materials prices and bad weather, while a fresh covid outbreak is raising the prospect of further economic disruption this month.
** CATCH UP QUICK on the top stories from today’s EnterpriseAM:
- More securitization in the works: Al Taamir for Securitization is in talks with Al Oula to manage a EGP 650 mn securitized bond issuance.
- More changes at the EGX: The EGX has changed up its list of shares eligible for same-day trading, margin trading and short-selling as part of its biannual rebalancing.
- Smoke ‘em if you’ve got ‘em: Philip Morris is among several tobacco companies with local operations that are said to be interested in bidding for a license to set up Egypt’s second tobacco company.
CORRECTION- Law firm Ibrachy & Dermarkar represented Swvl in the mass transit app’s recent merger with US-based SPAC Queen’s Gambit Growth Capital, not Shahid Law Firm as we incorrectly said in yesterday’s EnterprisePM. Shahid was on board, but as a co-legal advisor for Queen’s Gambit alongside Vinson & Elkins. Apologies for the confusion. The story has since been corrected on our website.
HAPPENING TODAY- The Africa Food Manufacturing exhibition kicked off today at the Egypt International Exhibition Center. The event will run until 4 August.
YOUR MANDATORY COVID STORY- We could have England to thank for the next-gen covid variants. Health experts are warning that new, more dangerous covid variants could evolve in England due to the government’s decision to lift restrictions last month, according to CNBC. Measures such as mask-wearing and social distancing have not been mandatory since the country’s so-called “Freedom Day” on 19 July, creating a set of conditions that more than 1.2k scientists around the world think will be ripe for producing stronger variants that could render existing vaccines ineffective.
Meanwhile, the UAE plans to administer Sinopharm jabs to children between the ages of 3-17, the UAE government said on Twitter. It added that the move comes after clinical trials and extensive evaluations, without giving more detail. The Gulf country has already been rolling out the Pfizer-BioNTech vaccine for children aged 12-15 after approving the decision in May. The UAE has fully vaccinated almost 71% of its population of roughly 9 mn, while 79% of individuals have received a first dose, the Health Ministry said.
🗓 CIRCLE YOUR CALENDAR-
It’s interest rate week: The Central Bank of Egypt will meet this week to review interest rates. All 12 analysts we surveyed expect the central bank to leave rates on hold, with inflation and rising global commodity prices weighing heavily on their decision.
Other news triggers to keep an eye on in the coming couple of weeks:
- PMI: July’s purchasing managers’ index will be out on Tuesday, 3 August.
- Foreign reserves: July’s foreign reserves figure should land next week.
- Inflation: Inflation data for July will be out on Tuesday, 10 August.
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.
🚙 FOR YOUR COMMUTE-
Clumsy neologism of the day: “Greenflation.” This is the term Morgan Stanley Investment Management’s Ruchir Sharma uses to describe the rising prices of commodities that are crucial for manufacturing green technologies.
Semantic jibes aside, Sharma has a serious point: Writing in an op-ed for the Financial Times, the strategist says that government policies are holding us back from taking serious action to tackle climate change, despite the focus on a green-led economic recovery among many governments around the world. The huge, post-covid spending programs and new regulations that are hampering investment in mines are responsible for the heightened copper, aluminium and lithium prices, conversely making it harder for the world to step up its climate response, he argues.
Sometimes, the best thing to do is… nothing. Passive investing, or linking assets to the benchmark indices, has netted USD 357 billion in savings for investors in the past quarter-century, according to S&P Dow Jones Indices, which maintains the S&P 500, S&P 400, and S&P 600 indices. Passive investing cuts out fees and mitigates underperformance risks. S&P’s director of index investment strategy claims that in the twenty years up to 2020, the S&P 500 outperformed 94% of large-cap US managers.
📺 ON THE TUBE TONIGHT-
Lift Like a Girl, an Egyptian award-winning documentary about a female weightlifter, has landed on Netflix just as we reach peak Olympics. Directed by Mayye Zayed, the documentary was shot over four years as it follows Zebiba, a weightlifter who strives to realize her dream of becoming a world champion. Zebiba’s main icon is her coach’s daughter, Egypt’s top female weightlifter and former world champion Nahla Ramadan. The documentary premiered at the Toronto International Film Festival and was screened at the last Cairo International Film Festival, winning several awards for its narrative and themes of female empowerment.
Sadly, there are no Egyptian weightlifters in Tokyo after the Egyptian Weightlifting Federation was handed a two-year suspension in 2019 for testing positive for performance enhancing substances.
🏅 TODAY IN THE TOKYO OLYMPICS-
Mostafa El Gamel lost his chance at getting to the final of the Men’s Hammer Throw after finishing 11th among 16 athletes in this morning’s event.
Diver Mohab Mohymen Ishak has qualified for the next round of the Men’s 3m Springboard after finishing the preliminary round in 12th place.
Samaa Ahmed has finished second to last in the quarterfinals of the Women's K-1 200m Canoe Sprint.
Wrestler Enas Khorshed is out of the Women’s Freestyle 68kg event after losing 7-0 to Germany’s Anna Schell in the round of 8.
Osama Elsaeid failed to qualify for the next round of the Men’s 50m Rifle Shooting Three Positions after coming second to last.
Hanna Hiekal and Laila Ali finished in 20th place in the artistic swimming women’s duet preliminary round.
WHAT TO WATCH tonight and tomorrow-
- 3:00am: Mohab Mohymen Ishak will compete in the diving men's 3m springboard semi-final.
- 5:14am: Wrestler Mohamed Metwally will go up against Belarus’ Kiryl Maskevich in the Men's Greco-Roman 87kg round of 8.
- 5:56am: Mohamed Ibrahim Kicho will play against a player that is still to be determined in the Men's Greco-Roman 67kg round of 8.
- 12:15am: Mostafa Amr Hassan will compete in Group A of the Men's Shot Put qualification round.
- 12:30am: Hanna Hiekal and Laila Ali will represent Egypt in the Women's Artistic Swimming Duet technical round.
- 1:40pm: Mohamed Magdi Hamza will compete in Group B of the Men's Shot Put qualification round.
- 1:45pm: Egypt will face Germany in the Handball quarter-finals tomorrow.
🎤 OUT AND ABOUT-
Singer/songwriter Malak is celebrating the release of her debut studio album at Cairo Jazz Club in Agouza tomorrow at 9pm.
Sharmoofers are performing at Cairo Jazz Club 610 in Sheikh Zayed on Wednesday at 9pm. Anis will be playing the opening and closing sets.
Blast from the past: All of your childhood favorite music from the shows on Spacetoon will be played at a concert in El Sawy Culturewheel on Saturday at 7pm.
💡 UNDER THE LAMPLIGHT-
Wall Street Journal tech and auto reporter Tim Higgins tells the history of Tesla in his new book Power Play. Tesla CEO Elon Musk is considered by some a visionary and by others a controversial huckster whose tweets have seen bns of USD lost. It’s hard to deny his success in helping to take the electric car mainstream. However, Musk himself has often been Tesla’s worst enemy, with his antics more than once threatening his auto giant’s legacy. Higgins asks the question of whether Musk is an underdog, an antihero, a conman, or some combination of all three, exploring the rollercoaster ride that is now one of Silicon Valley’s leading titans. Star Tribune is out with a review.
☀️ TOMORROW’S WEATHER- The somewhat-calm before the heat storm: Tomorrow will see temperatures of 42°C in Cairo before the mercury rises to 44°C and stays there for four days, according to our favorite weather app. Sahel is also getting hotter than usual with daytime highs of 36-37°C over the next few days.