PM — Even data has gender equality issues

It’s another relatively calm Ramadan afternoon, ladies and gentlemen. While we have yet to see any massive pieces of news emerging on the homefront or abroad today so far, we’re not exactly complaining about the breather.

SO, WHEN DO WE EAT? You’ll be breaking your fast at 6:17pm CLT this evening in the capital city, and fajr prayers are at 4:08am.

THE BIG STORY TODAY

A special freezone for the Egyptian Group for Multi-Purpose Terminals (EGMPT) could be coming soon, after the Madbouly Cabinet approved its establishment earlier today. The USD 500 mn project will be fully funded by Egyptian companies and entities, including the Alexandria Port Authority, the Suez Canal Authority, the Holding Company for Maritime and Land Transport, and EGX-listed Alexandria Container and Cargo Handling. The project entails establishing a multi-purpose terminal at the Alexandria Port that will equip the port to handle more containers and general cargo, in line with international standards, the cabinet said.

THE BIG STORY ABROAD

It’s another day of finger-pointing on violence between Russia and Ukraine, with reports of Russian forces continuing their bombardment of major Ukrainian cities as Western countries prepare to impose more wide-ranging sanctions on Moscow, according to Reuters. Russia has also reported a scuffle on its border with Ukraine in the Kursk region, saying that Ukraine “tried to fire mortars” at Russian border guards, who “returned fire,” the newswire reports.

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

• We imported 24% more wheat from Russia in March than we did the same time last year, buying some 479k tons of Russian wheat last month despite the ongoing war in Ukraine and its impact on the global grain market.
• Expedition gets green light to do DD on Domty as part of acquisition bid: Domty’s board of directors has given Expedition Investments the all-clear to start due diligence in connection with Expedition’s bid for control of the company.
• Rated Egyptian banks have little direct exposure to Russian and Ukrainian assets, according to an S&P Global Ratings report looking at the impact of the war on the banking sector in eight Middle East and African markets. “We do not expect the conflict will have significant direct effects on bank asset quality indicators,” the report read.

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???? CIRCLE YOUR CALENDAR-

Expect movement on fuel prices this week or the next: The government’s fuel pricing committee is due to have its quarterly meeting at the beginning of this month, when it will likely opt to hike prices in 2Q. If it does so, it would be the fifth time in less than a year. The committee increased prices of 80, 92 and 95-octane by EGP 0.25 when it last met in February in response to rising international prices, and since then, the war in Ukraine has sent Brent up another 15% past USD 107 a barrel. Prices at the pump have risen by up to 16% since April last year.

ALSO THIS WEEK AND NEXT-

• Foreign reserves: March’s foreign reserves figures will be announced in the next few days;
• Inflation figures for March are expected on Sunday, 10 April.

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

☀️ TOMORROW’S WEATHER- Expect the mercury to hit 39°C tomorrow during the day and drop to 20°C at night, our favorite weather app tells us.

Can computers replace brokers? A crypto exchange wants the answer to be yes: Crypto exchange FTX has made an intriguing proposal to US regulators: Offering crypto derivatives trading directly to users, without the intermediation of traditional brokers. The proposal by CEO Sam Bankman-Fried is part of a bigger plan, which could see him tap into the mainstream finance industry after taking over the crypto futures market, he said, according to the Financial Times. The US-based firm wants to expand the do-it-yourself, 24/7 practices developed for digital assets, bypass traditional gatekeepers, and have computers make trades and margin calls without opening or closing times.

There is, of course, some potential resistance to the concept: FTX’s approach to mechanizing exchange activity could be a “double-edged sword” creating potential for “destabilizing” upwards or downwards market moves, a Houston University professor of finance. But it’s not a proposal without merit, nor is it one that should be ignored altogether, he said. “The request represents an innovative proposal that deserves careful consideration,”said Rostin Behnam, chair of the US Commodity Futures Trading Commission.

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Amazon makes big stride in race towards internet from space: Project Kuiper — Amazon’s internet-from-space initiative — has booked 83 launches over the next five years to send its internet-beaming satellites into space, the company announced in a press release. Founder Jeff Bezos’ space company Blue Origin, US-based United Launch Alliance, and European launch provider Arianespace are currently developing the rockets for the launches. The initiative will see Amazon build a network of 3,236 satellites in low Earth orbit to provide high-speed internet to anywhere in the world. The initiative bears a resemblance to SpaceX’s famous StarLink program, which has already launched limited service around the world, with some 2k satellites currently in orbit.

???? ON THE TUBE TONIGHT-

(all times CLT)

Rageen Ya Hawa features hilarious characters and a great storyline to boot: Khaled El Nabawy plays Baligh Abou El Hana, a businessman who gets himself into EUR 5 mn-worth of debt while trying to start a business in Europe. The dire (and dangerous) situation forces him to come back to Egypt to settle his inheritance — and there begins the story. Baligh’s two brothers died in an accident and left the inheritance with their wives, who live in the same house but have constructed a wall between them, which they refer to in the show as “the new Berlin wall.” The wives couldn’t be more different and butt heads whenever they’re in the same vicinity. Baligh comes back to what can only be described as an influx of Egyptian drama in all its forms, but El Nabawy plays the part with so much charisma and charm that each obstacle turns into another reason to laugh. You can watch Rageen Ya Hawa on Shahid or Watch It.

⚽ Chelsea and Real Madrid will go head to head in an exciting match in the Champions League tonight at 9pm. At the same time, Villareal and Bayern Munich will also hit the field.

The Egyptian Premier League has two matches today: El Zamalek and Al Ahly are both playing today — but not against each other. El Zamalek will face Pyramids and Al Ahly will face Alexandria’s Al Ittihad, both at 9:30pm.

Meanwhile, Burnley and Everton will compete in the English Premier League at 8:30pm.

???? OUT AND ABOUT-

(all times CLT)

More Ramadan tents and events to add to your list:

New Cairo’s Azad Compound has brought back their El Sohbageyah tent which offers sohour made by Lebanese restaurant Tamara. On Friday, the tent will feature a concert by Mostafa Amar and Mostafa Haggag.

Medhat Saleh is performing this Thursday at Marrakech Tent in Hydeout. The performance will be accompanied by a sohour catered by The Smokery.

Meanwhile, Layaly Ramadan at Beit El Shaer in Moez Street will feature songs, poetry, karaoke, and more during the month of Ramadan everyday starting at 10pm.

Townhouse Gallery is hosting Gomhoor 3al So7oor — an open mic night where participants will also be invited to support local charities and businesses that will have booths open at the event. The food will be provided by Zooba.

???? UNDER THE LAMPLIGHT-

Invisible Women exposes “data biases in a world designed for men”: The data-centric book explores how numbers often ignore half of the population and are generally skewed towards men’s experiences. Author and campaigner Caroline Criado Perez brings together case studies, stories, and new research from around the world to piece together the harsh reality that the statistics influencing government policy, medical research, technology, workplaces, urban planning, and the media aren’t gathered in a way where they reflect challenges faced by women — and end up contributing to systematic inequality. Invisible Women will help you see the world anew and realize how much data affects everything around us.

The EGX30 fell 0.3% at today’s close on turnover of EGP 232.55 mn (76.2% below the 90-day average). Foreign investors were net sellers. The index is down 5.0% YTD.

In the green: Qalaa Holdings (+6.7%), Rameda (+3.5%) and Eastern Company (+1.4%).

In the red: EKH (-3.9%), MM Group (-3.4%) and ADIB (-1.4%).

Enterprise Explains: Derivative Trading. Warren Buffet famously referred to derivatives as “financial weapons of mass destruction” in a 2002 shareholder’s letter (pdf). But they’re hugely popular — and arguably the biggest asset class in the world. So what exactly are derivatives and how do we use them?

Financial derivatives defined: Put simply, a derivative is a financial instrument that derives its value from an underlying asset. When the value of the underlying asset changes, the value of the derivative changes, too. They’re primarily used for hedging against market risk, and speculating (making wagers) on changes in value to the underlying assets.

How big is the market? Hard to say, but derivatives basically have a foot in every door: The current size of the financial derivatives market is difficult to accurately estimate. Some put it as high as more than USD 1 qdrn (i.e. 1 mn bns), largely because derivatives are available on almost every asset class, including equities, commodities, bonds, currencies, oil, real estate — and even predictions about the weather.

Collectively, the total underlying value of derivatives eclipses the market value of their assets: The total notional value — or underlying value — of all contracts in the derivatives market was estimated at USD 610 tn in 2020, while the gross market value — or the price an asset would fetch in the marketplace — was around USD 15.5 tn. The reason the notional value of derivative contracts is nearly 40x higher than the market value all comes down to leverage, which is capital used to try to magnify investment results.

This allows investors to make speculative plays using derivatives with very little upfront cost — potentially bringing in substantial gains, but also magnifying potential losses. This is one reason why derivative trading is both so alluring, and — if undertaken unwisely — so risky.

There are four main types of financial derivatives: Forwards, futures, options, and swaps.

#1- Forward contracts (forwards): Forwards are the OG derivatives (they may date back to ancient Mesopotamia). Two parties who sign a forward contract agree to trade a particular underlying asset on a predetermined date (date of maturity) for a predetermined price (known as the strike). This is particularly useful for large businesses that want to hedge against changing market values for things like commodities and currencies. It allows them to lock in a price for raw materials for a future date so they can make longer-term production decisions, even amid market volatility.

Easy to customize but unregulated: Forwards don’t trade on a centralized exchange, but over-the-counter (OTC) between dealers. They’re easily customizable, making them particularly useful for hedging, but because they’re unregulated they also carry a greater degree of default risk than other instruments.

#2- Future contracts (futures): Futures are very similar to forwards, but they’re standardized, regulated, and traded on centralized exchanges. Every day, traders buy and sell mns of futures contracts on company stocks, oil and gas, gold, and a range of commodities, as this clip on derivatives explains (watch, runtime:10:48).

Egypt has its own futures exchange in the works, which last we heard is set to launch before the end of this year. In anticipation, we wrote this nifty explainer all about futures last year.

#3- Option contracts (options): An option is an agreement between two parties that allows one of them the right — but, crucially, not the obligation — to trade an asset on or before a set date, for a set price. Options can trade on exchanges or OTC. Options can be used either to hedge, or to speculate.

Put option or call option? A put option gives the seller the right to sell an underlying asset at a set date for a set price — for which the seller pays a premium. A call option gives this right to the buyer, who pays a premium. The size of these premiums is determined by a host of market-driven factors.

Swap contracts (swaps): In a swap, two counterparties exchange the cashflow of one party’s financial instrument for those of the other party’s financial instrument, for the amount of time stated in the agreement, fund manager and writer Patrick Boyle explains (watch, runtime: 17:35). This can be done with interest rates, currencies, commodities, or — most infamously — credit defaults, which many economists say helped cause the 2008 financial crisis because they were overleveraged. The exact way swaps play out depends on the financial asset being exchanged.

GO DEEPER-

• Check out fund manager and writer Patrick Boyle’s series of videos on derivatives, as well as his On Finance podcast on all things financial markets.
• Intros on everything from futures contracts to collateralized debt obligations, mortgage-backed securities, and credit default swaps: Khan Academy’s got you covered.
• Willing to pay to learn more? Coursera has a selection of courses.