PM — We’re making headway on replacing Dongfeng

Rejoice, friends, for it is finally the weekend. This week somehow felt particularly long, but we’re also not quite sure how it’s already the last month of the year.

THE BIG STORIES TODAY

#1- The Dongfeng replacement process is moving along nicely: State-owned El Nasr Automotive will meet with three Chinese companies next week to talk about potentially working together on locally manufacturing EVs, as El Nasr is in the market for a new foreign partner to fill the Dongfeng-shaped hole in its EV manufacturing plans.

#2- The securitized bond market is still red-hot: Palm Hills Development just closed (pdf) a four-tranche EGP 1 bn securitized bond sale, as GB Lease, Corplease, and GlobalCorp are planning a total of nearly EGP 8 bn in securitized bond issuances before mid-month.

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

• Abu Qir secondary sale coming this month: Abu Qir Fertilizers will sell an additional 10-15% of the company in a secondary offering on the EGX before the year is out, with a virtual roadshow targeting potential institutional investors currently underway.
• GM + Al Mansour Auto could partner up to produce EVs: General Motors and Al Mansour Automotive signed an MoU that could see them work together on EV production in Egypt.
• Lawmakers could decide to postpone targeted VAT hikes amid concerns about their impact on prices, as inflationary pressure has been building with increased fuel and food costs.

THE BIG STORY ABROAD-

It’s still all about Omicron, as the US reported its first known case of the variant in a fully-vaccinated person in California who tested positive seven days after returning from South Africa late last month. Reuters and the New York Times, among others, have more.

A bright spot in the darkness? WHO pushes for binding treaty on future pandemic cooperation: The World Health Organization agreed yesterday to start discussing a binding treaty on how its 194 member states should cooperate in the case of a future outbreak, according to a statement. The organization agreed to set up an intergovernmental negotiating body that will meet before March 2022 and deliver the result of their deliberations in May 2024. The spread of the Omicron variant and the subsequent travel bans showed how “countries worldwide are acting in a patchwork and discriminatory fashion” and helped push the case for the treaty, the New York Times writes.

Sentiment is a little mixed: The EU and the UK were among those who had strongly advocated for a treaty to be formed, while the US described the initiative as “a momentous step” but refused to commit to anything binding in a statement signed by Brazil and a number of other countries. China, meanwhile, was a bit more visibly wary saying that while Beijing “agreed in principle” with the concept of the accord, cautioning against “politicization, stigmatization and instrumentalization.”

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HAPPENING NOW- OPEC+ will decide today on whether or not to ramp up oil production as of next month. Oil futures are down as of dispatch, with WTI futures trading at USD 65.35/bbl (down 0.34%) and Brent crude futures dipping 0.25% to USD 68.70/bbl.

???? CIRCLE YOUR CALENDAR-

The key news triggers to keep your eye on at the start of December:

• PMI: Purchasing managers’ index figures for November for Egypt, Saudi Arabia, and Qatar will be released on Sunday, 5 December. Figures for the UAE, which normally come out on the same day as Egypt and Saudi, will be released two days later on Tuesday, 7 December.
• Foreign reserves: November’s foreign reserves figures will be released during the first week of the month.
• Inflation: Inflation figures for November will be released on Thursday, 9 December. Data for inflation typically appears on the 10th of every month, but is moved up one day if that falls on a Friday.
• Interest rates: The Central Bank of Egypt’s Monetary Policy Committee will hold its final meeting for the year to review interest rates on Thursday, 16 December.

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

☀️ TOMORROW’S WEATHER- It seems like it might be a cold, cloudy, and possibly rainy weekend — and we can’t say we’re not excited. The mercury will rise to 22°C on Friday, with a 20% chance of rain. Meanwhile, on Saturday, expect a daytime high of 23°C while nighttime lows will be in the range of 13-14°C during the weekend, our favorite weather app tells us.

Global tourism is expected to end the year with USD 2 tn in foregone revenues thanks to covid-19, as the tourism industry has been the worst-hit by the pandemic, the UN’s tourism body said. While tourism income has rebounded from last year’s historic losses, international tourist arrivals are forecast to remain 70-75% below 2019 levels this year. The report warns that travel demand could be further affected by the uneven distribution of vaccines around the world, along with new strains (hello, Omicron) prompting travel restrictions. The economic contribution from international tourism in 2021 is estimated at USD 1.9 tn, far below the pre-pandemic value of USD 3.5 tn. Tap / click here to read the full UNWTO report (pdf).

Would you like a side of sustainability with that arms purchase? As socially conscious investors seeking ESG investing cut ties with or call for greater accountability of arms producers in the EU, executives at European defense companies fear being shunned in the investment world, reports the Financial Times. It’s hard to imagine weapons manufacturers having any sort of ESG credit to their name, but some investors want these companies to cut back on their carbon footprints, for example, or increase transparency in the production and sales of their goods. One of the bigger challenges on that front is the lack of clear ESG definitions, while some companies point to their industry as being critical for security, without which “we cannot have sustainability.”

Big Oil is under pressure to make meaningful climate pledges: ExxonMobil’s pledge to spend USD 15 bn on cutting greenhouse gas emissions by 20-30% by 2030 were immediately criticized for being “grossly inadequate” compared to more ambitious climate commitments by rivals in Europe, the Financial Times reports. Despite being the US oil supermajor’s most ambitious emission targets to date, they pale in comparison to BP and Royal Dutch Shell, for example, which have laid out strategies to totally eliminate emissions by 2050. Exxon’s new goals were announced yesterday amid a revamp of its environmental goals after the company recently lost board seats in a proxy battle with activist hedge fund Engine No 1.

Is this the most niche spot in the “ecosystem” ever to exist? Startups are cropping up to help car aficionados hang on to vintage cars while abiding by new auto regulations through EV retrofitting, reports Reuters. The industry, which has emerged over the past five years in the US and Europe, has only really picked up over the past two years with advances in battery technology and electric motors. While some startups buy classic cars and strip them down and rebuild them, others are using them as a gateway to enter the increasingly attractive EV market or to retrofit diesel cars already on the roads, with some startups selling conversion kits for popular diesel cars.

WTA suspends China tournaments over Peng Shuai case: The Women’s Tennis Association (WTA) has announced that it will suspend its tournaments in China and Hong Kong over Beijing’s handling of Chinese tennis player Peng Shuai’s [redacted] assault allegations, reports the Financial Times. Early last month, Peng accused a former high-ranking Chinese Communist party member of assault on social media platform Weibo and then disappeared from public view for weeks, prompting questions about her safety. A Chinese Communist Party newspaper later posted videos of her eating at a restaurant and attending a tennis match and the International Olympic Committee president later spoke with the athlete via video call, all of which did little to quell concerns. China hosts 10 of the WTA’s 50 annual tournaments and the 2022 marquee WTA Finals are due to be played in Shenzhen as part of a 10-year contract to host the event.

???? ON THE TUBE TONIGHT-

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Something light to wind down with this weekend: High Maintenance follows a Brooklyn… uh, cannabis trader… as he makes his rounds of deliveries and gets sucked into the lives of his clients. The show portrays the career as one of those jobs where you get up close and personal with others (think a barber or a maid). But this dynamic doesn’t always suit the awkward main character, known as The Guy, who is played by Ben Sinclair. As soft-spoken as he is, The Guy acts more as a vehicle traveling between the other eccentric and complicated characters who really put the oomph in the storyline. High Maintenance has four seasons out now, giving you the chance to watch the characters grow and develop on screen, but always at a distance as The Guy acts more as an observer than an inquirer. The series is great at telling stories without actually telling them, relying more on inner parts of people that aren’t primarily communicated through dialogue. You can catch the entirety of the show on OSN Streaming.

⚽ The second round of the Arab Cup groups will start tomorrow: Bahrain will face Iraq in the Group A at 12pm while the other match in the group between Oman and Qatar begins at 3pm. In Group B, Mauritania will play against the UAE at 6pm, while Syria will face Tunisia at 9pm.

Meanwhile on Saturday, Group C will see Jordan compete against Morocco at 12pm and Palestine against Saudi Arabia at 9pm. As for Group D, Lebanon will play against Algeria at 3pm while Egypt will face Sudan at 6pm. (Egypt emerged victorious from yesterday’s match against Lebanon, ending the game 1-0.)

It’s shaping up to be an intense week in the English Premier League as gameweek 14 wraps up today and gameweek 15 kicks off on Saturday. Tottenham faces Brentford at 9:30pm tonight, while Manchester United competes against Arsenal at 10:30pm.

Saturday will start off with a bang as West Ham faces Chelsea at 2:30pm. A bit later at 5pm, Wolves is up against Liverpool, Newcastle against Burnley and Southampton against Brighton. The last confrontation of the day will be between Watford and Manchester City at 7:30pm.

Spain is also hot on Saturday: Seville hosts Villarreal at 3:00pm, Barcelona plays against Real Betis at 5:15pm, and Atletico Madrid faces Mallorca at 7:30pm. The day will conclude with a match between Real Sociedad and Real Madrid at 10pm.

Bundesliga: Borussia Dortmund and Bayern Munich have a match at 7:30pm on Saturday.

Down in Italy: Milan plays against Salernitana at 4pm, Inter goes out to face Roma at 7pm, and finally Napoli hosts Atlanta at 9:45pm.

???? EAT THIS TONIGHT-

Maadi’s 3al7atab pizzeria continues to serve up its creative culinary creations. 3al7atab uses a wood brick oven burning at 500°C to cook their pizza in less than 90 seconds and giving it a unique smoky flavor. The restaurant divides their pizzas into three categories: Rossa (with san marzano tomato sauce), bianca (without tomato sauce), and the elusively-named special. From rossa, go for their diavola or scarpetta, while the bianca pizzas offer “The Wolf,” a pizza dedicated to the great chef Wolfgang Puck, which has cream cheese, onion, garlic, salmon, and caviar. From their special menu, try out their tinga chicken pizza which fuses together Mexican flavors. 3al7atab also serves sandwiches and salads, but their pizza is definitely the main attraction.

???? OUT AND ABOUT-

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Standup comedy crew The Elite are heading to ElSawy Culturewheel tonight at 7:30pm.

The Breaking Walls Festival takes place tomorrow to celebrate dance, art, and theater under the umbrella of the 16 days of activism against gender-based violence. The event will bring together powerful women to share their stories through creative mediums.

Trip organizers Ghamer are hosting a movie night tomorrow at Wadi Degla Protectorate, with the event also including food, karaoke, and hiking.

TAM Gallery’s Cairo Art Fair VII will kick off tomorrow, featuring works by 150 prominent and emerging artists with a myriad of styles at different price ranges for anyone who would like to purchase a new piece of art. The art fair will take place at Abu Rawash and is open to the public until 31 January. Listen to TAM Gallery cofounder Lina Mowafy talk about how she’s been working to democratize the art scene through ventures such as the annual art fair which gives a chance to newbie artists to get recognition on our podcast, Making It (listen, runtime: 29:19).

???? EARS TO THE GROUND-

How Did This Get Made? — a podcast about the unfortunate series of events that led to some baaad movies being made: The podcast features three hilarious comedians, Paul Scheer, June Diane Raphael, and Jason Mantzoukas, who together discuss some truly horrible films. How Did This Get Made? has been around for over a decade now, a huge feat for the podcast world, but bad movies keep getting made, giving the trio ample fresh material to roast with their combined sense of humor that ensures you’ll get a laugh or two. With time, the podcast became less about horribly-produced films and more about the people who like to watch them, with the three comedians building an entire community around the show. Celebrity guests are a common addition to many episodes and it seems they all agree sometimes a movie is “so bad that it's amazing”. Recent episodes look at films such as the 1991 film Highlander II: The Quickening, Leprechaun in the Hood, and the Stephen King’s novel adaptation Dreamcatcher.

???? UNDER THE LAMPLIGHT-

The intricacies of fast fashion are darker than you can imagine: Unraveled: The Life and Death of a Garment begins by acknowledging the smart branding techniques and storefronts that push consumers to be oblivious to the origins of the clothes you wear. But behind every pair of shoes and every hoodie is a tale of a long production chain that often takes advantage of people, resources, and entire countries. Author Maxine Bédat takes us on one of these journeys, following a pair of jeans from dyeing and weaving factories in China (which pour residue down the drain and effectively pollute drinking water) all the way to sewing floors in Bangladesh and Sri Lanka where women are paid unlivable wages and provided with horrible working conditions. The horrors don’t end there — the next part of the journey follows the need to get rid of these jeans once they’ve concluded their wearable life. The book is an illustrative example of the unequal impacts of global capitalist structures that urge people to buy more without taking into consideration the items’ “real cost.” The book doesn’t necessarily focus on the “green” element, but even sustainable fashion brands have a hidden environmental cost.

The EGX30 fell 0.9% at today’s close on turnover of EGP 1.11 bn (22.4% below the 90-day average). Foreign investors were net sellers. The index is up 4.4% YTD.

In the green: Rameda (+4.3%), Speed Medical (+1.2%) and GB Auto (+0.8%).

In the red: Fawry (-3.2%), Aspire Capital (-2.9%) and Pioneers Properties (-2.8%).

A convergence of the new Omicron strain + the shipping crisis could push up global inflation and undermine the post-covid recovery in a big way. That’s the headline message from two recent reports from the United Nations Conference on Trade and Development (UNCTAD) and the Organization for Economic Cooperation and Development (OECD) looking at the forecast for trade, inflation, and the global socioeconomic recovery.

“Uneven” performance is still the headline feature of global economic performance: Across OECD countries, the economic recovery and output levels since mid-2020 have outstripped expectations, but is now beginning to slow down and “is becoming increasingly imbalanced,” said the OECD in its latest Economic Outlook report. The unevenness is particularly evident in low-income countries with low vaccination rates, and will likely remain a key fixture of the economic recovery going forward, with the report forecasting “sizeable long-term income scars from the crisis” among developing and emerging markets.

The recovery is being undermined by supply chain bottlenecks failing to keep up with surging consumer demand for goods, which is creating inflationary pressures across the world, the OECD notes. Prices are rising on the back of “disruptions in energy, food and commodity markets,” coupled with higher prices (and shortages) of energy that are holding back the production of “key materials and intermediate goods,” according to the report.

High shipping costs could also continue to hold back the global manufacturing recovery: If container freight rates increase by 10%, this could lead to a 1% decrease in manufacturing in the US and the Eurozone, while China’s production could drop 0.2%, according to UNCTAD’s Review of Maritime Transport 2021 (pdf). The report points to shipping supply chain disruptions, port constraints, and terminal inefficiencies as main problems driving up shipping costs globally.

This is all feeding into rising (and not-so-transitory) inflation: Global import price levels could increase by 11% and consumer price levels by 1.5% between now and 2023 due to high freight costs unless the shipping crisis is resolved, UNCTAD says. All of these inflationary pressures are now expected to last longer than previously anticipated, according to the OECD, which expects inflation to peak in 2021 but remain above pre-pandemic levels through 2023.

Even with inflation, the impact and recovery trajectory is mixed — both across countries and sectors. Small island developing states could see import prices increase by 24% and consumer prices by 7.5% while least developed countries could see consumer price levels rise by 2.2%, UNCTAD said. Low-value-added items such as furniture, textiles, clothing and leather products are expected to endure the highest price increases, forecasted at 10.2%. Meanwhile, the price of rubber and plastics products could go up by 9.4%, pharma products 7.5%, electrical equipment 7.5%, motor vehicles 6.9%, and machinery and equipment 6.4%.

Enter Omicron: All of these imbalances could be magnified with the arrival of the new covid-19 strain, which has so far seen several countries impose travel restrictions in a scenario that reminds us just a little too much of early 2020. “New mobility restrictions and port closures could hamper global trade, as persisting shutdowns in key economies reduce the availability of supplies along supply chains and lengthen supplier delivery times. Such further supply disruption might also create additional upward pressure on some prices,” the OECD says.

The outlook? It’s all about vaccination: As more countries — particularly developed economies — ramp up vaccination and are now working on rolling out booster shots, the effect of covid-19 and related supply disruptions will continue to ease, the OECD says. Demand patterns are also expected to normalize and kinks in the supply chain will be smoothed out, which “should facilitate a continued global economic recovery and remove some inflationary pressures, but will not necessarily make the recovery more balanced.”