PM — Everything you need to know about the transfer market

Good afternoon, ladies and gentlemen. We’re just about at the end of the work week, after making it through what felt like a very, very long January.

** TAKE OUR JANUARY ENTERPRISE READER SURVEY and get a chance to break bread with us: Give us your thoughts on how 2022 panned out for your business and industry, and what you’re expecting in the year ahead in our Enterprise Reader Survey.

We’re asking you to share your expectations on the EGP / USD rate in 2023, how you’re managing expenses amid the rising cost of living, where you see your industry as a whole heading, and whether you expect to make fresh investments — among a few other questions we ask our community on a regular basis. As is our custom, we’ll be sharing the results with all of you in a few weeks’ time to help you shape your view of the year.

You can take the Reader Survey here — it won’t take more than a few minutes to complete.

Want to have a meal with us? Leave your name, email, mobile number, and where you work in the box for “Is there anything else you want to tell us.” We’ll be inviting eight participating readers to a meal at one of our favorite restaurants.

THE BIG STORY TODAY

We’re going to have a privatization plan — with at least 20 companies in the chute — next week: The Madbouly Cabinet will unveil its plan to sell stakes in at least 20 state-owned firms following its meeting next week, Prime Minister Moustafa Madbouly said at a press conference today (watch, runtime 15:05). Madbouly did not specify a timeline for the plan, which will include some combination of EGX listings and stake sales to strategic investors. The prime minister also did not provide the names of any companies that will be included in the plan.

THE BIG BUSINESS STORY

It’s decision day at the Fed: The US Federal Reserve is expected to raise rates by 25 bps to a target range of 4.5-4.75% in its ongoing fight against inflation at the end of its two-day policy meeting later today, Bloomberg reports. The decision would mark a second shift down towards a more moderate pace of monetary tightening in response to signs of cooling inflation and slowing growth. The Fed in December stepped down the pace of its interest rate hikes to 50 bps following four consecutive 75-bps hikes.

The fight against inflation is far from over: The Fed is expected to signal that more interest rate hikes are coming in its statement accompanying the rate announcement as well as in Fed Chair Jerome Powell’s press conference later today. “With financial markets anticipating that the Fed will stop raising rates soon and possibly even cut them later this year, analysts say Powell will need to push back against such optimism,” says the Associated Press.

How much more tightening is left to go? Policymakers believe that rates need to reach north of 5% and stay there — for an unspecified period — to reign in price growth, according to Bloomberg.

The Fed meeting is everywhere in the international business press: AP | Financial Times | Bloomberg | CNBC

The ECB will follow tomorrow: The European Central Bank is expected to hike up rates by 50 bps in its meeting on Thursday to tackle unyielding core inflation, which remained at an all-time high of 5.2% in January, the Financial Times reports. While eurozone inflation has declined to 8.5% in January from 9.2% in December on the back of falling energy prices, it’s not enough to dissuade the ECB from hiking rates to curb core inflation, which is a superior measure of price growth as it excludes food and energy prices, the FT adds.

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

• The IMF has cut its economic growth forecast for Egypt, saying it sees GDP growing 4.0% this year, a 0.4 percentage point trim from its previous forecast in October, according to its updated World Economic Outlook released yesterday.
• Two Gulf lenders are positive on Egypt: Senior staff at Abu Dhabi Islamic Bank and National Bank of Kuwait both expressed optimism about Egypt and their businesses here in interviews yesterday.
• IDH pulls the plug on acquisition of a major stake in IDC: Integrated Diagnostics Holdings (IDH) has walked away from its bid to acquire a major stake in one of Pakistan’s largest diagnostics providers due to regulatory issues and challenging economic conditions.

???? CIRCLE YOUR CALENDAR-

It’s the start of a new month: Here are the key news triggers over the coming weeks.

• Interest rates: The Central Bank of Egypt will hold its policy meeting this Thursday. Most of the analysts we talked to last week expect the central bank to raise interest rates by 100-200 bps.
• PMI: S&P Global will publish January’s PMI on Sunday, 5 February.
• Foreign reserves: The central bank will release January’s foreign reserves figures next week.
• Inflation: The CBE and Capmas will publish inflation data for January the week after next.

The House of Representatives will reconvene on Sunday, 12 February, having adjourned yesterday after three days of debate.

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

????️TOMORROW’S WEATHER- We’re looking at a cloudy day tomorrow. The mercury is set to reach 17°C during the day tomorrow in the capital city before dipping to 10°C at night, our favorite weather app tells us.

Cracks in several of China’s Belt and Road infrastructure mega-projects have come to light: Over the last 10 years, China has disbursed USD 1 tn in foreign loans, as part of the Belt and Road initiative — intended to develop economic trade and expand China’s influence across Asia, Africa and South America— making Beijing the largest government lender to the developing world, the Wall Street Journal reports, citing World Bank data. Now, some of these projects have come under fire for their poor construction, which risks obstructing important infrastructure and burdening countries with additional expenses — and heavy debt burdens — for several years as they attempt to address their issues.

One major example: Ecuador’s main source of power is plagued with construction issues: The USD 2.7 bn Coca Codo Sinclair hydroelectric plant in Ecuador — the country’s biggest infrastructure project — is at risk of breaking down and its dam could potentially be damaged by the erosion of surrounding slopes. “We are suffering today because of the bad quality of equipment and parts” in Chinese-built projects, said René Ortiz, Ecuador’s former energy minister.

Cracks have also emerged elsewhere: The Neelum-Jhelum hydroelectric facility in Pakistan was shut down last year after inspectors found cracks in the tunnel that carries water through a mountain to power a turbine. Uganda’s power generation company said it has identified over 500 construction defects in a Chinese-built 183 MW hydropower plant on the Nile that has experienced repeated breakdowns since it began operating in 2019.

Different training methods are required to advance AI softwares in logical and social reasoning, researchers suggest. Although AI appears to write well-constructed sentences, it is incapable of processing thoughts to generate accurate arithmetic and spelling, nor delivering accurate ways to do simple tasks like frying an egg, The Atlantic reports. MIT cognitive neuroscientist Anna Ivanova has shown, through brain scans, a clear separation between language and thought neurons — which is why patients with aphasia, suffering from the loss of the ability to understand or speak from brain damage, can still utilize their thought neurons and excel in tasks such as math, music, and coding.

Given that AI is permeating every aspect of our lives, softwares such as ChatGPT, with language mastery, must upscale their models to “navigate logical and social context,” to be able to avoid mistakes, including disseminating false information, says Kyle Mahowald, a linguist professor at the University of Texas at Austin, and co-author of various linguistic papers.

???? ON THE TUBE TONIGHT-
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Jeff Bridges stars as a retired CIA operative in action thriller series The Old Man. Based on Thomas Perry’s novel of the same name, the series follows Dan Chase (even though that name is constantly changing), a former CIA agent who has been living a very low-profile life in Vermont with his dogs. Chase keeps a stash of money and fake IDs on hand — fitting, considering he’s been living in hiding under an assumed identity for years after disobeying orders. When he kills an unknown man who breaks into his house, he is forced to go on the run. Harold Harper (John Lithgow), an assistant director at the FBI, who worked with Chase decades ago during the Soviet–Afghan war, is tasked with tracking him down. He rents a room from Zoe McDonald (Amy Brenneman) who isn’t aware that he is being chased and hides out with his dogs until the cat and mouse game resumes. You can stream the show on Disney+.

⚽ Catch Al Ahly in the Club World Cup tonight: Al Ahly will be starting their campaign in the Club World Cup in Morocco by facing off against Oceania champions, New Zealand’s Auckland City in the first round tonight at 9 pm. Al Ahly will be joining the international competition for its eighth time this year and is looking to make it past the third place title secured in three prior contests. Tonight’s victor qualifies for the cup’s second round where they’ll meet US champions Seattle Sounders on February 4 for a chance to qualify for the semi-finals. You can check out the match on Saudi Arabia’s SSC channels or through Morocco’s Arryadia.

WATCH THIS SPACE- FIFA is going to roll out a change in “how referees communicate VAR related decisions,” the organization said yesterday. The change, which will be rolled out on a trial basis, will see referees actually communicating with fans in the stadium and watching at home to explain the rationale behind these decisions.

Over in the Spanish League: Barcelona looks to widen its five point lead against rivals Real Madrid when it faces off against host Real Betis tonight at 10 pm.

The second leg of the Carabao Cup semi-final between Manchester United and Nottingham Forest also kicks off at 10 pm. Keep in mind, United clinched a comfortable victory against Nottingham during an away game in their first leg with a three goal margin.

And over in the Ligue 1: Montpellier are up against Paris Saint-Germain at 10 pm.

Coppa Italia quarter finals: Fiorentina face Torino at 7pm and Roma face Cremonese at 10pm.

DFB Cup: Mainz face Bayern Munich at 9:45 and RB Leipzig play Hoffenheim at 7pm.

The Premier League returns on Friday — and the January transfer window just closed last night: There’s been a flurry of activity in the transfer market, particularly Chelsea, which is taking advantage of the lifting of the transfer freeze that was imposed until former Russian owner Roman Abramovic sold the club last summer. Among the other biggest changes: Mykhailo Mudryk moved from Shakhtar Donetsk for GBP 88.5 mn, Enzo Fernandez signed on for GBP 106.8 mn — a new record high at the Premier League — and Benoit Badiashile (formerly at Monaco) signed on for GBP 35 mn.

Elsewhere in the Premier League: At Arsenal, Leandro Trossard moved from Brighton for GBP 27 mn, Jakub Kiwior moved from Spezia for GBP 20 mn, and Jorginho — who was formerly at Chelsea — signed on for GBP 12 mn. Liverpool also signed Cody Gakpo from PSV Eindhoven for GBP 45 mn, while Manchester United has brought on Jack Butland from Crystal Palace, Wout Weghorst from Burnley, and Marcel Sabitzer from Bayern Munich (all on loan). Leeds signed Max Wober from Red Bull Salzburg for GBP 11 mn and Georginio Rutter from Hoffenheim for GBP 35.5 mn, while Man City now has Maximo Perrone from Velez Sarsfield for GBP 8 mn.

In the Bundesliga: Dutch defender Daley Blind has joined Bayern Munich on a six-month contract (until the end of the season), joining Yann Sommer — who is transferring from Borussia Mönchengladbach.

Also: Dejan Lovren is returning to Lyon — where he had previously played from 2010 until 2013 — in Ligue 1, while La Liga saw Dutch international Memphis Depay joining Atletico Madrid.

???? OUT AND ABOUT-
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Ubuntu Art Gallery is hosting Once Again, an exhibition showcasing artist Mohamed Khedr’s work, from 11am-8pm everyday, except Fridays, through 7 February.

Mazaher ensemble (Zar) are playing tonight at the Egyptian Center For Culture & Arts – Makan at 8pm, fusing three different styles of Zar.

Show off your vocal chops at Room Art Space’s Karaoke Night at 8 pm tonight.

Sweden-based Tarabband is playing “Tarab” beats at Cairo Jazz Club in Agouza on Thursday at 9pm.

Wala Fel Ahlam, a rom-com 60s musical performance is running this Thursday, 2 February, through next Sunday, 5 February, at Kasr El Nile in downtown.

The Pyramids Sound and Light Show is opening its gates from tomorrow and until Sunday, 11 February, opening up a portal to ancient times. The show will run three times a day, in Arabic, English, and Spanish.

Cairo Show Theater at Movenpick Hotel is hosting Sidaty ElGamila, a one-day play, starring Ahmed El Sakka this Friday, at 9:30pm.

Head to Rawabet Art Space this Saturday, hosting Comedy Sett, at 8pm.

???? UNDER THE LAMPLIGHT-

Back to the Office explores how iconic office spaces, across four different continents, have changed over the last six decades. Recent pandemic lockdowns have led us to reevaluate what office spaces should look like with some arguing that they should be more homey and others advocating for a more post-industrial look with exposed brick and steel rods. The authors of Back to the Office look to the past for answers. They explore old office buildings and examine old archival documents and photos and interview architects, workers, and building managers to track their development. Some remain offices while others have been repurposed into hotels and other spaces. “Impossibly minimal and elegant photos from the 1960s are juxtaposed with the more mundane reality of layers of accretion and clunky furniture,” The Financial Times writes in a review of the book.

The EGX30 fell 0.2% at today’s close on turnover of EGP 1.73 bn (3.2% below the 90-day average). Foreign investors were net sellers. The index is up 12.4% YTD.

In the green: Oriental Weavers (+5.5%), CIRA Education (+2.3%) and Juhayna (+1.4%).

In the red: Talaat Moustafa Holding (-4.8%), GB Auto (-4.3%) and e-Finance (-4.1%).

Shein’s ultra fast-fashion is as popular as it is unsustainable: Chinese retailer Shein is at the forefront of a new wave of fast-fashion companies that are making the clothing business cheaper, faster, and less sustainable than ever before. Founded in 2008, the fashion giant is valued at some USD 100 bn and continues to generate bns of USD worth of annual sales of low-cost clothing through its online store. But reports are mounting that scrutinize the company’s alleged labor violations and environmentally damaging practices, which some critics say are on a larger scale than any of its fast-fashion peers.

Shein is deploying a tried and tested fast-fashion business model, on steroids: Similar to how most fast-fashion retailers operate, Shein’s business model depends on providing a constantly changing inventory of clothes at an affordable price point. But the company, which holds some 28% of the fast fashion market in the US — pushes the model further than most. Shein releases some 700-1k new items every day and most of these new releases don’t spend long on the company’s virtual shelves — about 70% of its products in stock are less than three months old and only 6% of its inventory remains in stock for more than 90 days.

It’s been the target of serious accusations of worker mistreatment: In an investigation at two factories that supply clothes to Shein, undercover reporters discovered that workers were being severely mistreated, in violation of Chinese labor laws. Working 18-hour days with only one day off per month was the norm at these facilities, while workers had two-thirds of their daily wages docked if they made a mistake on clothing items, the investigation uncovered. Swiss watchdog group Public Eye reportedly found repeated fire hazards in the form of large clothing bags blocking the hallways and exits to some buildings.

And it's no small contributor to harmful emissions and waste: A separate investigation into Shein’s manufacturing practices found that the company’s use of polyester and oil is responsible for the release of some 6.3 mn tons of CO2 every year — the same amount of CO2 as 180 coal-fired power plants, according to a report (pdf) published on sustainability in fashion by the Changing Markets Foundation.

Fast fashion has long been scrutinized for its environmental practices: The fashion industry is responsible for up to some 8-10% of global carbon emissions and 20% of wastewater globally. And at current levels of production, the industry is on track to grow its greenhouse gas emissions by over 50% by 2030.

And its endemic waste problem: Since 2000, the number of new garments produced annually has doubled to around 100 bn and some 87% of all textiles are eventually discarded and find their way into landfills or end up being incinerated.

In some instances, Shein has been found to use dangerous materials in their clothing: A CBC Marketplace investigation last year found unsafe levels of harmful chemicals in about one in five fast-fashion products, including from Shein. One Shein toddler jacket contained about 20 times the amount of lead that Canadian health standards say is safe for children. The company removed the offending items from its stock.

But it’s still drawing mns of customers: Shein’s edge is no doubt the fact that its sells on-trend garments at a substantially lower price than many other fast fashion retailers, which for many consumers is an irresistible selling point. Add to that the company’s aggressive marketing campaigns like the wildly popular #SHEINHAUL on TikTok, where people post videos of themselves unpacking large orders, and the company’s apparent invincibility in the face of controversy starts to make some sense.

Shein has since come out and pledged to do better for workers in its partner facilities and the environment: The company late last year said that it plans to reduce its supply chain emissions by 25% by 2030 and will spend some USD 7.6 mn on a partnership with the nonprofit Apparel Impact Institute, which helps manufacturers create efficiency schemes across their supply chains, to make good on this pledge. Shein also said that it would require all its suppliers to become compliant with a code of conduct based on International Labor Organization principles and will run more audits of its suppliers’ facilities.