Thursday, 28 October 2021

PM — All eyes turn to the CBE as the ECB (thankfully) keeps its interest rates on hold.

TL;DR

🔎 WHAT WE’RE TRACKING TONIGHT

It’s interest rate day, and all eyes will be on the Central Bank of Egypt as its Monetary Policy Committee meets today to decide on interest rates. The prevailing wisdom is that rates will remain unchanged, with all 12 analysts and economists we surveyed expecting the CBE to maintain its cautious approach for an eighth consecutive meeting, despite rising global inflation as energy prices skyrocket.

Look for inflation and protecting foreign inflows to be top-of-mind for policymakers at today’s meeting: Annual headline inflation hit a 20-month high in September, as international oil and commodity prices had knock-on effects on domestic prices and coincided with the government’s plans to slash its subsidy bill. But policymakers will need to balance their concerns on inflation with the need to protect the all-important carry trade and maintain portfolio inflows. Egyptian debt currently offers some of the highest real interest rates in the world, a fact that has kept foreign inflows high and contributed to stability in the EGP to USD exchange rate.

The CBE’s meeting comes on the heels of the European Central Bank deciding to keep interest rates on hold, saying that it won’t raise rates until inflation stabilizes at its 2% target in the medium-term. The ECB still maintains that the current spike in inflation is “transitory,” leading investors to pencil in a 20 bps interest rate hike over the course of a little more than a year, according to Bloomberg.

The transitory nature of inflation just made itself apparent in Europe’s natgas prices, which cooled off, in response to Russian President Vladimir Putin instructing state-backed giant Gazprom to fill European storage sites in Germany and Austria next month, according to Bloomberg. Improved gas flow from Norway as well as promises to increase exports, coupled with dropping Chinese coal prices, are also contributing to the downward trend, analysts tell the business information service. One analyst speculated that the decision may be connected to a Tuesday announcement by Germany’s Economy Ministry that the “certification of Nord Stream 2 wouldn’t pose any risks to security of supply.” There have been murmurs that Russia has been withholding gas to force through the certification of the pipeline, which will transport natural gas from Russia into the EU.

The MPC’s decision should be out by 6pm CLT today. We will have detailed coverage on the decision in Sunday’s EnterpriseAM.


THE OTHER BIG STORIES TODAY-

#1- Egycomex is still on track to go live early next year: Egypt’s long-awaited commodities exchange (Egycomex) appears to be on track to begin operations at the beginning of 2022, with Supply Minister Ali El Moselhy signaling that we should expect an announcement soon which commodities will be traded on the exchange. El Moselhy is also set to iron out the final details and procedures to launch the exchange with EGX boss Mohamed Farid and head of the Internal Trade Development Authority Ibrahim Ashmawy next week.

#2- We’re getting a fresh USD 360 mn loan from the World Bank to support our post-covid economic recovery, with a potential equivalent package from the Asian Infrastructure Investment Bank on the way. The World Bank loan will be geared towards supporting sustainable and inclusive growth, as well as creating private sector jobs.

^^ We’ll have more on these stories and more in Sunday’s edition of EnterpriseAM.

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

  • US companies to work with military to produce desalination tech: Aquatech and MPS Infrastructure will form a consortium with the National Authority for Military Production to set up facilities to manufacture equipment used for desalination and wastewater treatment, and manage upgraded plants.
  • Withholding tax causing slow progress on Euroclearable status? An issue in how Egypt calculates the withholding tax on government securities is what’s been delaying making the country’s debt Euroclearable.
  • Chimera wraps second closing of its maiden fund: Swvl backer Chimera Capital has exceeded its USD 50 mn target with the completion of the second close of its first VC fund.

PSA- If you’re heading to Amreeka soon, you might want to check new covid-19 conditions for air travel. Starting 8 November, all air passengers — age 2 years or older — are required to present a negative PCR test within different time periods, depending on their vaccination status, the US Embassy in Cairo said in a statement. Proof of recovery from covid in the past 90 days will also be accepted. Travelers will also be allowed to enter the US if they visited or transited into one of the 33 countries previously barred by a Presidential Proclamation including the UK, China, Brazil, and India. The proclamation will no longer be in effect as of 8 November.

For citizens, residents, and immigrant visa holders: If you’re fully vaccinated, you will need to present airlines with proof of vaccination and a negative PCR test administered three days before their flight. Those who are not fully vaccinated will need to provide proof of a negative covid-19 test administered one day before their flight’s departure.

All non-immigrant, non-citizen travelers to the US will be required to be fully vaccinated, provide proof of vaccination status, and get a PCR test three days before their flight.

CLARIFICATION- An earlier version of this story suggested the Presidential Proclamation barring entry to the US from 33 countries would remain in effect. 

PSA #2- Startups and small businesses can now register for Facebook and RiseUp’s training program, Digitize with Facebook. The program, developed by Facebook in partnership with RiseUp and Egyptian startups Ibots, Botme, and Expandcart, aims to help 5k small businesses and startups in Egypt build and scale their digital presence through — you guessed it — Facebook social media platforms. Register here.

THE BIG STORY ABROAD-

SIGN OF THE TIMES- The global semiconductor and chip shortage is a main character in several companies’ earnings reports: Automotive heavyweights General Motors, Ford, and Volkswagen all reported lower bottom lines in 3Q2021 as the global chip shortage weighed on their output. General Motors reported a 40% y-o-y decline in net income during the third quarter of the year, while Ford’s net income narrowed 23% y-o-y (pdf) and Volkswagen noted that “semiconductor bottlenecks” drove down y-o-y income “in spite of having full order books.” The three companies indicated they were unable to meet rising demand and output targets as a result of global supply chain snags.

On the flipside, semiconductor shortages were a boon for Samsung — the world’s biggest chip and smartphone maker — which said the booming supply for chips during the pandemic helped bump up its net income 31% during the third quarter (pdf).

Is there an end in sight? The wait time for chips has begun to level off, but there’s still little clarity on when the mismatch between supply and demand could fully be resolved, Bloomberg notes. Chipmaker TSMC is cranking up supply with USD 100 bn investments in expanding its production capacity, with Samsung and Intel also announcing plans to significantly increase capacity over the next few years — but still don’t think the crisis will be resolved before mid-2022 at the earliest.


ALSO MAKING GLOBAL HEADLINES- Democrats’ plan to impose a “wealth tax” on American bn’aires all but collapses — but the minimum corporate tax looks more viable: The White House and Democratic lawmakers in Congress continued discussions on how to tax America’s ultra-rich until late yesterday evening after pushback from moderates led to failed negotiations to target individuals who earn upward of USD 100 mn annually in a new tax, according to the Financial Times. The proposal was ultimately taken off the table, with lawmakers focusing their efforts instead on a minimum corporate tax plan, which would see the 200 largest US companies face a minimum 15% corporate tax. The corporate tax proposal coincides with the OECD’s push to impose the same minimum tax rate on corporates globally, with the landmark agreement set to be finalized at the G20 leaders’ summit in Rome this weekend.

📆CIRCLE YOUR CALENDAR-

It’s a new month next week: Here are dates for some key news triggers as we enter November:

  • PMI: November’s purchasing managers’ indexes for Egypt, Saudi Arabia and the UAE will land on Wednesday, November 3.
  • Foreign reserves: October’s foreign reserves figures will be out sometime during the first week of November.
  • Inflation: Inflation figures for October will be released on Wednesday, 10 November.

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 30°C during the afternoon tomorrow while Saturday will be slightly cooler with a high of 29°C, our favorite weather app tells us. Both days are forecasted to have nighttime lows of 20°C.

🚙 FOR YOUR COMMUTE

Private equity firms are having a royalties ball as streaming alters music’s clashflow, making it a lucrative and attractive asset class. Global revenues from the music industry had begun to wane after the CD era, as physical sales of music tracks dropped, but the surging popularity in streaming platforms has breathed new life into the industry and created more potential for the future of music consumption, one music buyer, who received a USD 1 bn commitment from private equity giant Apollo Global Management, told the Financial Times. With viral trends, advertising and movies renewing songs’ lifetime and streaming platforms providing strong revenue streams, the potential market for music copyrights is drawing some of the biggest names in private equity.

Digital distribution has played a huge role in reviving the music industry. Last year, the industry saw its sixth consecutive year of growth after “nearly two decades of gradual decline,” when the transition from CD to MP3 and file sharing hammered the industry. The widespread adoption of music streaming services, which accounted for 56% of the recorded music industry in the US, recorded an estimated USD 11.9 bn in global sales last year. The only other growing trend in the music industry is vinyl records, which recovered from USD 34 mn worldwide sales in 2006 to USD 416 mn in 2015, as the revival of the classic format draws more enthusiasts.

The latest from Dr Evi…sorry…Jeff Bezos: Blue Origin unveiled plans to develop a commercial space station “Orbital Reef” as a “mixed-use business park,” with Boeing and Sierra Space, Reuters reports. Orbital Reef announced that the 32k sq ft park would “provide customers with an ideal location for ‘film-making in microgravity’ or ‘conducting cutting-edge research,’” in addition to sporting a space hotel. A space tourism company, Blue Origin launched its first flight into space in July of this year.

👌 ENTERPRISE RECOMMENDS

Go on an emotional rollercoaster this weekend + Wegz hits the stage + Listen to Mona Chalabi’s Am I Normal?

📺 ON THE TUBE TONIGHT-

(all times CLT)

If you’re up for an emotional rollercoaster, we’ve got just the thing for you: Scenes from a Marriage is the HBO remake of the 1973 series by Swedish filmmaker Ingmar Bergman. The original series was so influential that it was credited with a rise in the Swedish divorce rate. The remake, written and directed by Hagai Levi, is just as powerful and creatively executed. Jonathan (played by Oscar Isaac) and Mira (played by Jessica Chastain) have been married for years, but their relationship is on the rocks despite an intense love they hold for each other. While the premise might be simple, it’s the delivery that blew our mind.

The entire story is told through scenes where the duo simply talk, fight, weep, and then talk some more. Through their psychological warfare on each other, viewers get a sense of their history together and their feelings now, all bolstered by the actors’ undeniable chemistry. It’s one of those shows where there isn’t a clear antagonist, but instead you find yourself ping ponging from one emotion to the next right along with the characters. One thing is for sure: It’s a wild ride and if you’re up for it, Scenes from a Marriage is available on OSN.

We have a few matches at the end of this busy week, one of which is in the Egyptian Premier League between Ghazl El-Mahalla and Al Masry at 5:30pm. In La Liga, Celta Vigo will play against Real Sociedad at 7pm, Granada against Getafe at 8pm, and finally Levante against Atletico Madrid at 9:30pm. At 8:45pm, Napoli will host Bologna in the Italian League.

Don't miss the PSG match against Lille in Ligue 1 tomorrow at 9pm.

And on Super Saturday:

The English Premier League: Leicester City will compete against Arsenal in the first match of the tenth week of the league at 1:30pm, followed by five matches at 4:00pm: Liverpool v Brighton, Manchester City v Crystal Palace, Newcastle v Chelsea, Burnley v Brentford, Watford v Southampton. To round out the day, Tottenham is playing against Manchester United.

La Liga: Two big matches are taking place in the Spanish League on Saturday. Elche hosts Real Madrid at 2pm and Barcelona will hit the field with Deportivo Alaves at 9pm. Other matches to check out are Sevilla v Osasuna at 4:15pm and Valencia v Villarreal at 6:30pm.

Other matches worth watching in Germany and Italy: Bayern Munich will play against Union Berlin at 3:30pm on Saturday in the Bundesliga while Borussia Dortmund hosts Cologne at the same time. In Serie A, Atlanta will compete against Lazio at 3pm and Juventus will face Verona at 6pm.

Here at home: Al Ittihad play against Future (previously Coca-Cola’s football team) at 5:30pm on Saturday, while Enppi and Al Mokawloon will meet at 8pm.

🍜EAT THIS TONIGHT-

Ramen that came straight out of an anime: Pucca Ramen Corner in Nasr City serves authentic Japanese food that looks as good as it tastes. Their ramen comes with ingredients such as seaweed, naruto, eggs, wakame, and bean sprouts. When put together, it looks exactly like it would in an old SpaceToon TV show — and it tastes even better. We loved their miso ramen, kyoto ramen, and hakodate ramen (which has a base of white coconut soup). Pucca also has a ton of Indonesian-style ramen that use more spices and often come with shredded chicken. The side dishes are also worth checking out, we liked their chicken katsu and dimsum.

🎤 OUT AND ABOUT-

(all times CLT)

Catch Wegz, Afroto, and Almas in concert tomorrow at El Manara Arena. Doors open at 3pm.

Egyptian underground band Massar Egbari are taking the stage in Family Park tomorrow at 5pm.

Zaid Khaled and Akher Zapheer are hitting the stage at Agouza’s Cairo Jazz Club on Saturday at 9pm.

Celebrate The Sound of Old Movies at Abdeen Palace through music by Medhat Saleh, Reham Abdel Hakim, and the Cairo Symphony Orchestra by Nayer Nagui. Tickets are sold out for tomorrow, but Saturday still has spots left.

👂 EARS TO THE GROUND-

Data journalist Mona Chalabi strikes again with a new podcast: Titled ‘Am I Normal?’ and created in cooperation with the TED Audio Collective, we were pleasantly surprised by how good the podcast is. Each episode tackles a common question that we’ve all asked ourselves before to gauge how we measure up to most other people, whether it’s how long it takes to get over a breakup or how many friends you should have. Chalabi uses her undeniable talent to (creatively) make sense of numbers and explore how data tries to provide answers for these very personal questions. She also includes personal stories to show how she herself relates to data points. Chalabi puts it best when she says that the process helps her “make sense of a chaotic world and help me to understand how I fit into that chaos.” The Financial Times is out with a review, giving props to the interjections from Chalabi’s mom in the podcast. You can find the show on Apple Podcasts.

💡 UNDER THE LAMPLIGHT-

Tns by Robin Wigglesworth explores “how a band of Wall Street renegades invented the index fund and changed finance forever”: The index fund is now a common part of asset management and finance in general. But that wasn’t always the case. It took a group of “iconoclastic” (we hate the term, but they did kind of earn it) investors who weren’t afraid to break the status quo. They included economist wunderkind Gene Fama, humiliated industry executive Jack Bogle, bull-headed and computer-obsessive John McQuown, and former WWII submariner Nate Most. Together, they initiated the index fund revolution that disrupted Wall Street and reshaped global markets. Wigglesworth — who is a Financial Times global finance correspondent — ensures that his book isn’t a boring finance rundown, but instead writes the story as an adventure full of challenges, bold characters, and high stakes.

🌊 GO WITH THE FLOW

Market roundup on 28 October

The EGX30 rose 1.3% at today’s close on turnover of EGP 1.32 bn (13.5% below the 90-day average). Foreign investors were net sellers. The index is up 6.1% YTD.

In the green: Pioneers Properties (+14.7%), Madinet Nasr Housing (+8.3%) and Rameda (+6.1%).

In the red: Fawry (-1.7%), Palm Hills Development (-1.6%) and MM Group (-1.6%).

💻 TECH

Maybe connecting everyone in the world might not have been such a good idea after all: Facebook’s dominant selling point has long been its ability to bridge physical barriers and bring large groups of people together over its platforms, but what if it's exactly that goal that is at the root of many problems like ethnic violence, conspiracy theories and social divisions we are seeing arising today?

The good ol’ days: Unlike the early years of Facebook where you might have had only a handful of posts from friends you actually got to interact with in real life, there are currently bns of accounts belonging to people with varied interests from across the world that are able to connect in some way with no more than a single tap on a screen.

The company argues that this evolution was a good thing — that major platforms like Facebook might give some lonely kid who’s the only person into anime in their town access to a whole network of individuals scattered around the globe with shared interests — a situation that may have never been possible offline.

But rapid and widespread connection could also bear some associated costs: Users with harmful interests or violent inclinations who hop on these platforms also have access to that same vast network where they’re able to easily meet like-minded individuals and consume content that can often help reinforce those same views. We’re talking about everything from militant recruitment to the rapid spread of conspiracy theories. But this problem also exists among non-violent communities online where people often find themselves deeply entrenched in internet echo chambers where everyone around them shares the same views and are rarely challenged.

There’s also the problem of professional content creators: Content on Facebook’s platforms in its early years was mostly driven by ordinary users sharing posts and images among themselves but the rise of online influencers has totally changed how the platform operates. Influencers are now at the helm of driving user engagement and helping the platform expand its indirect network effects. This poses the separate but closely related issue of engagement with algorithmically-backed content from professional creators, a recipe that has been shown to be harmful to many young users on its platforms.

The problem isn’t exclusive to Facebook, it is fundamentally tied into the way companies have designed social media networks. Social media platforms need ever-expanding networks to drive more people to their platforms to spend more of their time engaging with content. Haugen at one point described the situation Facebook is facing as a “feedback loop that they can’t get out of.”

Communicating the risks associated with use of its platform: To reel in some of the damaging effects of this vast global network facebook has created, maybe the company could begin by releasing research detailing the mental health issues that may arise from social media use, argues Andy Wu in the Harvard Business Review.

Bolster moderation efforts: Facebook could also expand its team of 15k moderators who are currently tasked with reviewing questionable content posted to the site for potential violations of community guidelines.

Take accountability for connections: There needs to be some kind of internal or external party ready to hold Facebook accountable specifically for its algorithm-generated connections. Content on Facebook is already reviewed by its team of moderators and the company’s Oversight Board, but there remains a large component of what makes Facebook problematic unchecked: suggested connections generated by its algorithms, says Wu. Public representatives could be stationed to oversee Facebook from the inside, France Haugen, former product manager at Facebook who testified at a senate hearing against the company said.

Maybe even cool down the algorithms that prioritize content based on what is most likely to be engaging for users to plain old chronologically ordered timelines. Some have even suggested that the company orient its content algorithms towards boosting posts that are likely to promote charitable causes or civic engagement, rather than likes.

📆 CALENDAR

23-28 October (Saturday-Thursday): A high-level delegation of the UN’s International Fund for Agricultural Development (IFAD) will visit Egypt to meet with government officials and travel to IFAD-supported projects in the country.

24-28 October (Sunday-Thursday): Cairo Water Week, Cairo, Egypt.

27-28 October (Wednesday-Thursday): Intelligent Cities Exhibition & Conference, Royal Maxim Palace Kempinski, Cairo, Egypt.

28 October (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

28 October (Thursday): Second tranche of overdue subsidy payouts will be handed to eligible exporters.

30 October – 4 November (Saturday-Thursday): The first edition of Race The Legends, Egypt.

30-31 October (Saturday-Sunday): G20 Leaders’ Summit, Rome, Italy.

31 October (Saturday): World Cities Day, Luxor, Egypt.

November: The French-Egyptian Business Forum is set to take place in the Suez Canal Economic Zone.

November: Egypt will host another round of talks to reach a potential Egyptian-Eurasian trade agreement, which can significantly contribute to increasing the volume of Egyptian exports to the Russia-led bloc that includes Armenia, Belarus, Kazakhstan and Kyrgyzstan.

1-3 November (Monday-Wednesday): Egypt Energy exhibition on power and renewable energy, Egypt International Exhibition Center, Cairo, Egypt.

1-12 November (Monday-Friday): 2021 United Nations Climate Change Conference (COP26), Glasgow, United Kingdom.

2-3 November (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

6 November (Saturday): Deadline to apply to Nahdet El Mahrousa’s Rabeha, a women entrepreneurship accelerator program.

7-10 November (Sunday-Wednesday): Cairo ICT 2021, Egypt International Exhibition Center, New Cairo.

8 November (Monday): Egypt CSR Forum, International Citystars, Cairo.

15-21 November (Monday-Sunday): Intra-African Trade Fair 2021, Durban, KwaZulu-Natal, South Africa.

16-17 November (Tuesday-Wednesday): Africa fintech summit, Cairo.

18-19 November (Thursday-Friday) British royal family members Prince Charles and the Duchess of Cornwall visit Cairo.

25-27 November (Thursday-Saturday): RiseUp Summit, Cairo, Egypt.

26 November-5 December (Friday-Sunday): The 43rd Cairo International Film Festival.

29 November-2 December (Monday-Thursday): Egypt Defense Expo, Egypt International Exhibition Centre.

30 November (Tuesday): Launch of open call by GIZ and KfW for green project proposals in Egypt as part of their Investing for Employment facility (pdf).

7-8 December (Tuesday-Wednesday): North Africa Trade Finance Summit.

8-10 December (Wednesday-Thursday): Global Forum for Higher Education and Scientific Research (GFHS), Cairo, Egypt.

12-14 December (Sunday-Tuesday): Food Africa Cairo trade exhibition, Egypt International Exhibition Center, Cairo, Egypt.

13-17 December: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

14-19 December (Tuesday-Sunday): The Cairo International Festival for Experimental Theater.

14-15 December (Tuesday-Wednesday): The Federal Reserve meets to review interest rates.

15 December (Wednesday): Deadline for joint stock companies and investment companies in Cairo to join e-invoicing platform.

16 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

1Q2022: Launch of the Egyptian Commodities Exchange.

7 January 2022 (Friday): Coptic Christmas.

27 January 2022 (Tuesday): National holiday in observance of 25 January revolution anniversary / Police Day.

14-16 February 2022 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, New Cairo, Egypt.

19 February 2022 (Saturday): Public universities begin the second term of the 2021-2022 academic year.

1H2022: The World Economic Forum annual meeting, location TBD.

2 April 2022 (Saturday): First day of Ramadan (TBC).

22-24 April 2022 (Friday-Sunday): World Bank-IMF spring meeting, Washington D.C.

24 April 2022 (Sunday): Coptic Easter Sunday (holiday for Coptic Christians).

25 April 2022 (Monday): Sham El Nessim.

25 April 2022 (Monday): Sinai Liberation Day.

May 2022: Investment in Logistics Conference, Cairo, Egypt.

2 May 2022 (Monday): Eid El Fitr (TBC).

16 June 2022 (Thursday): End of 2021-2022 academic year for public schools.

27 June-3 July 2022 (Monday-Sunday): World University Squash Championships, New Giza.

30 June 2022 (Thursday): June 30 Revolution Day, national holiday.

2H2022: IEF-IGU Ministerial Gas Forum, Egypt. Date + location TBA.

8 July (Friday): Arafat Day.

9-13 July (Saturday-Wednesday): Eid Al Adha, national holiday.

30 July (Saturday): Islamic New Year.

6 October (Thursday): Armed Forces Day, national holiday.

8 October (Saturday): Prophet Muhammad’s birthday.

18-20 October 2022 (Tuesday-Thursday): Mediterranean Offshore Conference, Alexandria, Egypt.

**Note to readers: Some national holidays may appear twice above. Since 2020, Egypt has observed most mid-week holidays on Thursdays regardless of the day on which they fall and may also move those days to Sundays. We distinguish below between the actual holiday and its observance.

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