PM — Market alarm bells ring as Moderna boss says new vaccines needed for Omicron

Happy hump day, friends. It’s not quite a news dump day — as is typical of Tuesdays — but it is a relatively brisk news day with several important stories to keep your eye on.

THE BIG STORY TODAY-

Market regulator adds ESG-related instruments to Egypt’s bonds menu: Companies in Egypt will soon be able to list social, ESG, gender equality and women’s empowerment, and sustainable development bonds on the EGX after the Financial Regulatory Authority (FRA) approved amendments to the executive regulations of the Capital Markets Act today, according to a statement (pdf). The rollout of these bonds aim to support Egypt’s Vision 2030 in the areas of sustainability, gender equality, ESG, and social equity — the same way the introduction of green bonds in 2020 was meant to aid Egypt’s transition to a green economy.

WATCH THIS SPACE- Citizens won’t be able to get into a post office branch or government facility starting tomorrow without proof of vaccination or a negative PCR test. The Madbouly cabinet had issued a decision last month barring citizens from entering government facilities as of tomorrow. Egypt Post will be abiding by the rules as of tomorrow, with an internal circular distributed to all branches, a senior Egypt Post source confirmed to Enterprise.

You might be able to go to the bank, though: Customers can still enter bank branches without showing proof of vaccination, as long as they are wearing a face mask and adhering to other precautionary measures, Federation of Egyptian Banks Chairman Mohamed El Etreby said in a statement (pdf). These rules will remain in place until banks get official orders to do otherwise, according to El Etreby. Local Development Ministry spokesperson Khaled Qassem had said earlier this week that the cabinet’s decision would extend to post offices and banks.

HAPPENING NOW-

Spanish Prime Minister Pedro Sánchez is in town to discuss bilateral relations, economic and political cooperation and strategic ties, the Spanish embassy in Egypt said. Sánchez is leading a delegation of business leaders, the statement says.

The Egypt Defense Expo (EDEX) continues today and runs until this Thursday, 2 December. Some 400 international manufacturers and suppliers are showcasing military equipment and defense technologies at New Cairo’s International Exhibition Center.

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

• SODIC board oks takeover bid: SODIC’s board of directors has approved a bid from Aldar Properties and ADQ despite the offer price falling short of the benchmark set in a fair value report.
• The PM now has emergency pandemic powers: A law handing the prime minister extraordinary powers to respond to pandemics and public health crises was ratified by President Abdel Fattah El Sisi yesterday.
• More African exports ahead: The government wants to increase the value of exports to Africa to USD 7 bn in 2022 and USD 10 bn by 2025 as part of a broader plan to boost trade with the continent.

THE BIG STORY ABROAD-

We’ll need new vaccines for Omicron — and it will probably take months, says Moderna CEO: Currently available covid-19 vaccines are probably going to be significantly less effective against Omicron, which has a “high number” of mutations on the spike protein, than they were against the delta variant, Moderna CEO Stéphane Bancel tells the Financial Times. That means vaccines will need to be modified, but it will likely take months before pharma companies will be able to produce “new variant-specific jabs at scale.”

But previous vaccines will still provide some level of protection, European Medicines Agency executive director Emer Cooke told the European Parliament, according to Reuters.

Boosters for all: The US Centers for Disease Control and Prevention is recommending that everyone aged 18 years and up should get a booster shot to help improve protections against potential Omicron risks. Egypt is also rolling out booster shots to vulnerable people and the elderly soon, the government announced last week.

Nonetheless, the statements from Moderna got the markets in a bind: Responding quickly to the news, the Stoxx Europe is currently down almost 1%, Tokyo's Nikkei index ended today’s session down 1.6%. WTI futures for January are down 2.8% to USD 68.09/bbl while Brent crude slipped 3.1% to USD 71.17/bbl as of dispatch time.

Oil losses give us March 2020 déjàvu: Oil prices plunged 19% in November in the biggest monthly loss since the early days of the pandemic in March 2020, when the onset of covid smashed global consumption, according to Bloomberg.

Winter Olympics are still on: China is undeterred by Omicron and is on track to hold the Winter Olympics and Paralympics in Beijing, in roughly 65 days, Foreign Ministry spokesperson Zhao Lijian said at a presser today, according to Bloomberg. The new variant will pose challenges to prevention and control, but China’s experience in coping with the pandemic will not force it to cancel the event, the spokesperson said.

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FOR TOMORROW-

It’s a new month tomorrow. 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.

???? CIRCLE YOUR CALENDAR-

Young professionals can now apply for the recently-launched McKinsey Forward program which focuses on leadership, business, and the transition to digital, McKinsey announced in a press release (pdf). The six-month program aims to teach participants how their business can combat challenges and use them to their advantage, integrate tech, and be adaptable and resilient during times of change. Forward will be available without charge to those eligible to apply, and one of the requirements is having less than five years of work experience. You can apply via this link before the 12 December deadline.

You have until 24 January to submit your local project proposals to Germany’s KfW Development Bank’s investing for employment facility (pdf). The bank will give grants to projects that drive job creation, especially those that are considered green. You can find more information on how to apply here.

The new round of Silicon Waha’s Startup Factory will kick off on 10 December at the Assiut Technology Zone. The program will offer marketing tips and tricks for startup founders, who can apply here.

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

☀️ TOMORROW’S WEATHER- The week’s weather is sticking to 22°C during the day starting tomorrow, with nighttime lows between 12-15°C, our favorite weather app tells us.

Real estate in the metaverse is now a thing — and it ain’t cheap: The unlikely venture seems to be taking off, with a plot of virtual land selling this week for a record USD 2.43 mn (the equivalent of 618k of the crypto mania), reported Reuters. The buyers of the land, Metaverse Group, are the first real estate company dedicated to the metaverse economy. The virtual land plot is located in the Fashion Street district of Decentraland — an online environment where you can meet other people through their avatars and exchange land and buildings using crypto. Metaverse Group will use the land to support its expansion into digital fashion, which we imagine will have the company create buildings and avatars that showcase their digital clothes offerings. The group said back in March that it was looking to launch a subsidiary that would own and operate a portfolio of development properties in several commercially viable metaverses.

Zara parent company Inditex has completed a “generational handover process” that has been in the works for a decade now, appointing Marta Ortega Pérez — the daughter of Inditex’s founder and majority shareholder Amancio Ortega, as chairperson. Oscar García Maceiras will take over as CEO from Carlos Crespo, who will now take on the role of COO. The company’s shares slid 4% on the announcement. Other than Zara, Inditex also counts brands Massimo Dutti, Stradivarius, Oysho, and Pull&Bear as its ventures. The retailer more than rebounded from the pandemic, recording record revenues with the reopening of all its stores and an expansion in digital sales. The Financial Times and Bloomberg have the story.

Has the supply chain crisis exacerbated anticompetitive practices? The US’s Federal Trade Commission is requesting information from Amazon, Procter & Gamble, and other large firms to conduct a study on the effects of supply chain disruptions on competition and pricing, the commission said in a press release. Companies have been asked to detail how they’ve been handling the supply chain crisis — looking at factors such as transportation, orders, and prices — though the request isn’t part of law-enforcement action and companies are not obligated to comply. The Wall Street Journal had the story.

Goldman Sachs has introduced new benefits to attract and retain talent as the Great Resignation continues to take its toll on labor in the US, reports the Wall Street Journal. The company will now allow longtime employees (15+ years) to take a six-week unpaid sabbatical and will allow employees to take up to 20 days bereavement leave for the loss of an immediate family member. It will also offer 20 days of paid leave for pregnancy loss and is increasing its retirement fund. Last year, the Wall Street giant introduced paid family leave for employees that have problems related to covid-19. Goldman Sachs required most of its employees to return to office in June, ahead of many other companies.

???? ON THE TUBE TONIGHT-

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The apocalypse paves the way for an exploration of human and AI emotion in Apple TV+’s Finch: It’s been 20+ years since the release of Castaway, but Tom Hanks is still the best one-man-cast in new sci-fi drama film Finch, which set the record for the most watched release on Apple TV+ when it dropped earlier this month. Hanks plays a robotics engineer named Finch who is one of the last survivors of a cataclysmic solar event that has left the world a wasteland. Finch has lived in this post-apocalyptic world for a decade now and built a world for himself with his loyal, furry companion Goodyear. It’s this dog that drives the events of the film, as Finch worries that no one will take care of Goodyear after his death and decides to build a robot to take on the task. The robot names itself Jeff and as time progresses, it develops a myriad of human emotions and characteristics (but unfortunately does not get along with the dog). The film explores the overlap between humans, AI, and animals and how sometimes one can help bring out the humanity in the other, even if they’re not technically human.

⚽ December is around the corner… which means more pressure-filled English Premier League matchweeks. Today, gameweek 14 kicks off, just two days after the end of matchweek 13 last Sunday, while we can wait for gameweek 15 next Saturday.

Today's matches: Newcastle faces Norwich City at 9:30 pm, and Leeds United and Crystal Palace will hit the field shortly after at 10:15pm.

The Arab Cup: The tenth edition of the tournament kicked off today with a match between Tunisia and Mauritania, which ended with a steep 5-1 victory for Tunisia, while the match between Iraq and Oman is still on as we dispatch. Later tonight, Qatar will face off against Bahrain at 6:30 pm while the UAE will play against Syria at 9 pm.

Egypt will play its first match against Lebanon tomorrow at 3pm. Prior to that, a 12pm match between Algeria and Sudan (who are also in Group D) will begin, helping us get a first glimpse of the group standings.

???? EAT THIS TONIGHT-

Dive into a (delicious) fairytale land at Hans & Gretel Egypt: The new candy store at City Center Almaza sells all the sweet treats that Hansel and Gretel could have ever wished for. Hans & Gretel is colorfully and gorgeously decorated, with a large tree in the middle of the shop, high ceilings with candy cane structures, and a series of interactive toys showcasing the candy-making process. The shop sells a multitude of sweet and sour candies that you can fill a bag with, as well as ready-made combination boxes and lollipops. The fairytale store also sells freshly-made sweets such as Belgian bubble waffles, donuts, and ice cream — with the option of combining them all of course. Hans & Gretel is a sight to behold, and if you have children, it’s sure to make their day.

???? OUT AND ABOUT-

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The Fabrica Vocal Academy Recital is taking place today at El Sawy Culturewheel at 7:30pm, featuring new voices as they perform songs from the classical repertoire, musical theater and various other genres.

It’s the opening reception of the Arête exhibition by Akram Fadl at the Nile Art Gallery at 6pm. Fadl combines realism and symbolism to create figurative artworks.

More Christmas Bazaars: Make a day out of the Osana Christmas Bazaar at Maadi’s Osana Family Wellness by checking out the selection of vendors and getting a Christmas special at the OsanaCafe.

Cairokee is holding a concert at New Cairo’s Hyde Park on Friday at 8pm.

???? UNDER THE LAMPLIGHT-

The man who spent seven decades dedicated to biodiversity and conservation: Scientist: E. O. Wilson: A Life in Nature is the timely celebration of one of the most eminent biologists of modern history: E.O. Wilson. Wilson published groundbreaking work on the sociology of ants and humans in his 1975 book Sociobiology that argued that “all animal behavior, including that of humans, is governed by the laws of evolution and genetics.” Based on this argument, he became a vocal advocate for the importance of biodiversity and conservation and always maintained a skill for synthesizing the fields of science and humanities in a way that brought him much controversy inside and outside academia. But Wilson wasn’t a scientist who was afraid to rethink and question his earlier assumptions, and his books often acted as follow ups to his scientific findings as he and his work matured.

OUR ANALYST OF THE WEEK- Shady Amr Al Afify, senior analyst at NI Capital (Linkedin).

My name is Shady Amr Al Afify and I joined NI Capital two months ago, working on the buy-side on their asset management team. I started my career as a research analyst at Prime Holding covering the industrials sector, but soon moved to their asset management team as well. Since university I knew I wanted to be in finance and I felt that it reflected the strategic side of me. I was adamant to make sure that I could enter the field so I got involved in many student activities at Helwan University that were related to finance. I finally got lucky when I landed a job that has taught me a lot.

In asset management, you cover all fields, which was a bit of a shock at first. I had already gotten used to construction and industrials during my research stint, so when I first started looking at consumers and banking stocks, it was very far away from my comfort zone. But with time you start to grasp the different processes and dynamics of each sector and see the overlap between them. To be honest, industrials are still my favorite sector though [laughs].

But that exposure to everything is the best part of my job. You really feel the impact of it when you’re sitting down with an expert in the field and can keep up a conversation. It’s also a great feeling to be able to make decisions and wait for their results. It’s exciting to see what happens next.

This isn’t a new answer, but the worst part of my job is the stress. You get so used to overthinking every decision that it starts to seep into your personal life. I also joined the field during a very hectic time as it was right after the EGP float and then the pandemic hit… so it’s been a bit tough to always have things thrown at you.

My theory of investment is to have a diversified portfolio. For me this means having a core portfolio and a trading portfolio. The core portfolio consists of value stocks with strong fundamentals that will pay off long-term. These act as a sort of hedge against any volatility risk. Meanwhile, the trading portfolio is more short-term and takes into account timely growth stories. The risk is higher, but the return is too, so it really depends on the client’s risk appetite.

Institutional investors have recently been leaning into short-term investing more than usual. No one has the tolerance to wait anymore, especially since the market has been very event-driven. An event or announcement causes a stock to go up or down for a brief amount of time and then it goes back to being flat. This dynamic is common when more retail investors get involved in the stock market, and institutions understand that trading short-term could be more lucrative at the moment.

The most important factors I look at before investing in a stock are the fundamentals, the liquidity, and if it will secure a good dividend yield.

It’s unclear whether the EGX30 will close in the green this year, especially with the recent spread of Omicron. If you had asked me a few days ago, I would have said that the EGX30 will likely stay flat towards the end of the year — rising 4-6% YTD isn’t green compared to other stock markets. But now with all the uncertainty around the new variant, I’m really not sure. Usually, foreign investors tend to flow back into the EGX during the last weeks of the year, and this would have been a catalyst for the index to rise. However, the lockdowns and the possible disruptions to international trade will surely dampen market sentiment.

All sectors in Egypt will be impacted by Omicron, but some will feel the burn more than others. Tourism is likely to take a big hit due to reinstated travel restrictions by countries worldwide. Meanwhile, demand for non-essential consumer goods and real estate properties usually also falls during times of uncertainty. I also expect any company that relies on international trade to be impacted heavily. The sectors that could come out on top are telecoms, healthcare, and fintech.

The variant could also lead to another commodities supercycle. There are now lockdowns and closures happening worldwide, but when everything reopens and infrastructure spending increases once again, commodity prices could go up. I had previously expected the commodities supercycle to end after 1H2022 as prices normalized.

Once again, it’s hard to determine whether 2022 could be the year of Egypt. Some argue that companies now have the experience and knowledge to mitigate the impacts of the circumstances we’re seeing. However, even before Omicron, there were uncertainties in the market such as the capital gains tax that were causing outflows from the exchange, and the outlook for emerging market currencies in general hasn’t been great.

The last great thing I watched was Squid Game. The idea behind the show appealed to me and I think it really shows that people under financial stress could do anything to get out of their situation. Other than that, I’m a huge Al Ahly fan and I’m always glued to the TV during their matches.

There really isn’t time to read anything other than CFA material [laughs]. I’m currently studying for level two of the CFA and my exam is in February.

In my downtime, I spend time with my friends. We play PlayStation or card games such as tarneeb and estimation. My friends are also in the financial field so our card games get very intense and full of analysis [laughs].

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MARKET NEWS-

MinaPharm’s bottomline increased 30% y-o-y during 3Q2021, recording EGP 103.2 mn, according to its latest financial statement (pdf). Revenues for the quarter were up 28% y-o-y to EGP 754.8 mn. On a nine-month basis, net income was up 72% y-o-y to EGP 358.9 mn on revenues of EGP 2.2 bn, up 34% y-o-y.

Sinai Cement narrowed its net losses to EGP 323.3 mn in 9M2021, from EGP 425 mn during the same quarter last year, according to its quarterly financials (pdf). The company’s losses continued despite sales rising 67% y-o-y to over EGP 984.8 mn. Egypt’s cement industry may finally be seeing signs of recovery after suffering from a drawn-out supply glut.

MARKET WATCH-

The EGX30 rose 1.6% at today’s close on turnover of EGP 1.81 bn (20.9% above the 90-day average). Local investors were net sellers. The index is up 5.1% YTD.

In the green: Fawry (+7.4%), Heliopolis Housing (+6.7%) and EFG Hermes (+5.2%).

In the red: Cleopatra Hospital (-2.2%), Egypt Kuwait Holding-EGP (-2.0%) and Telecom Egypt (-1.4%).