PM — Our post-covid recovery gets another shot in the arm from the AIIB

Happy hump day, wonderful people, and welcome to another relatively calm afternoon for the news as we slide towards the weekend.

THE BIG STORIES TODAY-

The Asian Infrastructure Investment Bank (AIIB) approved a USD 360 mn loan to support Egypt’s post-covid economic recovery, according to a cabinet statement. The loan comes following the World Bank’s approval of a separate but identical loan in October, under a larger development policy financing framework (pdf) set by the International Cooperation ministry in partnership with the two lenders. The two loans, amounting to a combined USD 720 mn, will be used to support the private sector, increase transparency at state-owned enterprises and promote women’s participation in the workforce, in a bid to bolster the second phase of Egypt’s economic reform program.

Regulators set 10-day subscription period for Aldar-ADQ acquisition of SODIC: SODIC shareholders have 10 working days, starting tomorrow, to weigh in on the mandatory tender offer (MTO) from the UAE’s Aldar Properties and sovereign wealth fund ADQ to acquire 90% of the real estate developer, according to an announcement (pdf) displayed on EGX screens today. SODIC made public the details (pdf) of the MTO, in which Aldar and ADQ are offering EGP 20 per share. The MTO subscription period wraps on Tuesday, 7 December. The Financial Regulatory Authority had greenlit the MTO yesterday.

HAPPENING NOW-

The Comesa head of state and government summit is currently underway at the new administrative capital. President Abdel Fattah El Sisi assumed Egypt’s chairmanship of Comesa at the opening ceremony of the summit earlier this morning, according to an Ittihadiya statement. The president will be involved in setting the summit’s medium-term goals for 2021-2025, which will include improving regional trade between the summit’s nations, in tandem with the African Union’s Continental FreeTrade Area (AfCFTA). You can see his opening remarks here (runtime: 15:16).

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

• Aldar-ADQ acquisition of SODIC approved by FRA: New tariffs on imported phones: All imported mobile phones will be subject to a 10% import tariff, double the 5% originally imposed last year, with only phones assembled by local electronics outfit Sico exempt.
• Slightly less cement oversupply: Production is on course to easily outstrip demand in 2021 despite production cuts being introduced in July to ease the years-long supply glut.
• A national hydrogen strategy is in the works: The government is currently contracting with a global consulting office to develop a national hydrogen strategy, Electricity Minister Mohamed Shaker said.

THE BIG STORIES ABROAD-

Biden turns on the crude taps in defiance of OPEC: The US will release 50 mn bbl of crude oil from its Strategic Petroleum Reserve over the next few months, according to a White House statement, as part of an unprecedented effort to bring down global prices in tandem with countries including China, India, Japan, Korea and the UK. The move is likely to draw the ire of the Saudi-led OPEC group of oil exporting nations, which has repeatedly ignored calls from the US and other countries to up supply as demand rebounds following the pandemic, Bloomberg reports. US benchmark oil prices slid slightly on the news, with WTI futures for January slipping 0.6% to USD 76.33/bbl as of dispatch time.

It’s a risky move, and OPEC is baring its teeth: Biden has arranged the largest ever privately agreed release of oil from global reserves, as he attempts to break what some see as an OPEC-led stranglehold on supply. But OPEC+ officials have warned that they could cancel their own planned supply increases in response at the group’s December meeting, setting the stage for a tug-of-war on oil prices in the global market. Meanwhile, a resurgence of covid across Europe and the US could slow the momentum behind the recent pickup in demand, according to Bloomberg.

TRY takes a tumble (again): Turkey’s TRY extended its losses today to reach fresh lows with one of its biggest one-day drops after the country’s central banks decided to slash interest rates last week, while President Recep Tayyip Erdogan insists lower interest rates are crucial for boosting economic growth. The currency has been steadily falling 11 days in a row — its longest losing streak in 20 years — and is down around 40% against the greenback YTD. Erdogan’s grip on Turkey’s central bank has seen him fire multiple governors and other committee members who were not on board with his monetary policy visions, leading market confidence in a potential reversal of the rate cuts to all but dissipate. Bloomberg and the Financial Times have the story.

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???? CIRCLE YOUR CALENDAR-

The Home Appliances and Table Show (HATS Egypt) is ongoing and will wrap up tomorrow. The event is organized by the Engineering Export Council of Egypt and brings together companies working in the home appliances sector.

Startup gathering RiseUp starts on Thursday and runs through Saturday.

The Cairo International Film Festival kicks off its weeklong run this coming Friday.

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 mercury has started to inch upwards, with a daytime high of 25°C tomorrow and a nighttime low of 17°C, our favorite weather app tells us.

One token to rule them all: A “JRR Token” cryptocurrency has been removed from circulation after complaints by the Tolkien estate, reports the Financial Times. The estate of Lord of the Rings’ author JRR Tolkien filed a complaint with the World Intellectual Property Organization (WIPO) after the launch in August of the cryptocurrency — which used the JRRToken.com domain name for a website that “featured rings, hobbit holes and a wizard with an uncanny resemblance to Gandalf.” WIPO’s decision that the developer sought to take advantage of Tolkien’s fame came in spite of the developer’s insistence that “token” was a generic term that was unrelated to Tolkien.

Albert Einstein’s notes are going up for auction and are expected to raise EUR mns: The physicist’s handwritten notes on the theory of relativity will be auctioned off in Paris today by Christie's as part of The Exceptional Sale collection, the auction house announced. The 54-page working manuscript was written by Einstein and Michele Besso between June 1913 and early 1914. The manuscript is the “most valuable” of Einstein’s notes since it is one of only two surviving manuscripts documenting the genesis of general relativity. The collectible is expected to fetch some EUR 2-3 mn and you can check out live updates from the auction when it starts at 7:30 CLT.

Tesla holds a sway over the stock market far bigger than its market cap justifies, reports the Financial Times. The company is less affected by market trends than it is by factors like its CEOs tweets or BTC, allowing it to operate outside of conventional market influences. What the newswire calls the “Tesla-financial complex” is also largely due to a complex of associated investment vehicles, copycats and associated derivatives that give the company a role that far exceeds its USD 1.1 tn valuation. The company’s options market is so massive — its nominal trading value averaged USD 241 bn per day recently, and it is more than 60 times as active as the FTSE 100 options market — that it affects how markets price risk. The FT even argues that the success of its stock has spilled over onto other EV companies, with Amazon backed EV startup Rivian and Lucid receiving high valuations due to the “halo effect” associated with Tesla.

???? ON THE TUBE TONIGHT-

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Season two of The Mind, Explained is out on Netflix: The streamer’s spinoff of Vox’s Explained series looks at different topics concerning the functioning and development of our brain. The first episode of the season, titled “How to Focus,” is the best out of the five in our opinion, and looks at how human beings developed their attention spans over time. It takes us through the history, but ultimately focuses on how the many stimuli we encounter today have resulted in our brains becoming unable to multitask and focus. Next up is an episode on the “Teenage Brain” which delves into how brains work during the hormone-driven adolescent phase, and “Personality” which explores how people develop various personality traits and characteristics, as well as how the brain tends to fall prey to stereotypes. The episode titled “Creativity” challenges the theory that the right hemisphere of the brain is the center of imagination, while the final episode looks at the phenomenon of “Brainwashing” and how people, from politicians to psychopaths, have the ability to manipulate others.

⚽ It’s an important day in the Champions League as we enter the fifth round of the group stage matches and get closer to seeing who will make it to the finals:

Group E: Bayern Munich (who has already qualified for the next round) will compete against Dynamo Kiev at 7:45pm. Meanwhile, Barcelona (currently ranking second) is playing a fate-deciding match against Benfica at 10pm as the former needs a victory to ensure its qualification. Benfica won’t go down easy, as gaining the upper hand in the match means it can overtake the Catalan team in the standings if it gets the three points and overtake Barcelona.

Group standings: Bayern (12 points) – Barcelona (6 points) – Benfica (4 points) – Dynamo Kiev (1 point).

Group F: Group leaders Villarreal will play against Manchester United at 7:45pm, with both teams tied in terms of points, but set apart by differences in the number of goals. The match will have a decisive role in determining the qualifications. Atlanta (in third) is competing against the Young Boys at 10pm and both teams can still technically qualify for the round of 16.

Group standings: Villarreal (7 points) – Manchester (7 points) – Atlanta (5 points) – Young Boys (3 points).

Group H: Juventus and Chelsea have both already qualified for the next round, but will play today's match for fun at 10pm. Meanwhile, Zenit St. Petersburg will face Malmo at 10pm as well.

Group standings: Juventus (12 points) – Chelsea (9 points) – Zenit (3 points) – Malmo (zero).

Group G: The least popular of the groups, with teams such as Salzburg, Lille, Wolfsburg, and Seville. Lille will play against Salzburg and Seville will compete against Wolfsburg, both at 10pm.

Group standings: Salzburg (7 points) – Lille (5 points) – Wolfsburg (5 points) – Seville (3 points).

In the Egyptian League, Al Mokawaloon will play against Ismaily at 5:30pm, while Future competes against Enppi at 8:00pm.

???? EAT THIS TONIGHT-

Celesta Chocolatier makes art in a box: The pink-branded store in Sheraton makes all kinds of sweet treats, but their specialty is their bite-sized Belgian chocolates. The chocolates are beautifully decorated, coming in the form of leaves, seashells, hearts, crowns, pineapples, coins, and more. If you’re an eclair fan, you’ll love their varieties of the pastry, which comes in hazelnut, pistachio, raspberry, and Lotus — all in keeping with their attention to aesthetics. Celesta also sells different types of fancily-shaped gateaux, cakes, muffins, macarons, and even gelato, ensuring that anyone with a sweet tooth will find their gold and white shop a haven.

???? OUT AND ABOUT-

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Plug Vol.1 – Downtown Chill is GrEEK Campus’ newest event series, this time featuring three women artists from the independent music scene: Dina El Wedidi, Maryam Saleh, Nouran Abu Taleb. Celebrating the eighth anniversary of the GrEEK Campus, the concert will take place on Thursday at 7pm, with tickets available here.

El Far3i will also be playing at the GrEEK Campus on Friday at 4pm. Also hitting the stage as part of the concert are Ali Wezzy, Moussa Sam, and Gelba.

???? UNDER THE LAMPLIGHT-

The rules of ownership that rule our lives: Mine by Michael Heller and James Salzman explores the dynamics and psychology of ownership from the moment we learn the word “mine” as babies, all the way through to owning a house, in a society where practically everything is owned by someone. But the story becomes much larger than just owning property — who owns creative property, data, and even airspace and the pollution that comes with it? Ownership is a central factor in the discussion of topics such as digital privacy, climate change, and wealth inequality. The book presents the “six simple stories that everyone uses to claim everything,” proposing that by knowing these stories, people can change the narrative and scope of responsibility surrounding some of the biggest issues facing the human race today.

OUR ANALYST OF THE WEEK- Mai Atef, senior asset management analyst at HC Securities Egypt (Linkedin).

My name is Mai Atef and I’m currently working as a senior asset management analyst at HC Securities. I graduated with a major in economics from Cairo University and I also have a minor in computational social science. I started work at the Planning Ministry in the strategic planning unit, which was a great experience and gave me exposure to many different sectors early on in my career, from K-12 education and vocational training to urban planning. It helped me learn how to align the interests of several stakeholders, and it’s been very fulfilling to see the initiatives I worked on come to light years after leaving the ministry.

I then moved to Prime Holding where I was an economist for a brief period of time — it was actually during the EGP float — before becoming an equity analyst. I stayed at Prime for three years and then moved to Shuaa Securities Egypt as a sell-side analyst. Next up was Delta Inspire, which operates more as a VC and often saw me work with SMEs. Finally, I landed my current position at HC where I mostly cover basic materials, consumers, and fintech.

The best part of my job is that I’m constantly learning new things. It’s a requirement to read a lot about different topics, as this keeps you up to date with what’s happening in the world. With time, you learn to relate things happening on different continents to each other. It’s also very nice to be able to make recommendations that drive decision making and knowing you were part of the outcome.

The worst part of my job is that it’s demanding. However, it’s also very rewarding so it kind of offsets the stress for me.

My theory of investment is to look long-term and go for stocks with strong fundamentals. I also pay attention to companies’ business models and management — especially how they react to events happening in the market and their industry. Finally, their client management is something important to look at, as it reflects their transparency and communication.

I recommend stocks based on the risk-appetite of the specific investor I’m talking to. It’s important to settle the tone of the investment early on, and I often choose a straightforward approach and ask how much risk they’re willing to take. The answer can vary, with some choosing to take on more high-return stocks while others would rather stick to T-bills and bonds. I usually encourage some diversification between both tracks. These days most people are in the middle of the spectrum and not many people go to extremes in either direction.

2022 could be the year of Egypt, but it really depends on certain decisions currently being taken on the capital market. There’s also a lot happening on the international front that is causing uncertainty, such as the Fed’s decision on interest rates and the current leadership at the Fed, including Jay Powell’s renomination and Lael Brainard’s appointment as vice-chair. But there are positive indications as well, such as the stream of IPOs slated for next year which could bode well for the EGX, especially if there was a greater role for the private sector in the economy.

The last great thing I watched was Maid. It really showed violence and abuse from different perspectives, and the show itself was beautifully created. I also enjoyed The Playbook, which shows sports coaches reflect on how they achieved success.

All my reading has been related to the courses I took as part of the Fintech Academy. The academy is a program by Knowledge Officer and GIZ that really delves into fintech and startups. They take a broad approach at first, but also focus on Egypt and the region. I went into the program when I was still at Delta Inspire, and it really helped me in general. It was interesting to learn about the dynamics of early entrepreneurs and meet and work with people who have startups or are aiming to launch them. I also joined the Venture Capital program at the AUC School of Business which gave me insights from the other perspective, as it looks at how you would think and act if you’re part of an investment company. Both programs really help you build connections in the market.

At one point, I hope all my interests will come together in my job. I enjoyed the development aspect at the finance ministry of course, and working with startups. I see it happening as impact investing and ESGs become more important in Egypt.

I’ve recently gotten into rowing. I like that it's a sport that you can start your day with and that it entails a lot of discipline and consistency.

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EARNINGS WATCH-

Egyptian Resorts Company (ERC) reversed its losses in 3Q2021, reporting EGP 9.2 mn in net income, compared to a net loss of EGP 1.5 mn during the same quarter last year, according to a company financial statement (pdf). ERC revenues inched upwards 38.5% y-o-y to EGP 61.9 mn during 3Q2021. The group reported losses worth EGP 4.3 mn during 9M2021, falling from the first nine months of last year, while 9M2021 revenues fell 17.9% y-o-y to EGP 103.5 mn.

MARKET ROUNDUP-

The EGX30 rose less than 0.1% at today’s close on turnover of EGP 968 mn (33.6% below the 90-day average). Foreign investors were net sellers. The index is up 4.8% YTD.

In the green: Palm Hills Development (+5.2%), Raya Holding (+3.7%) and Pioneers Properties (+2.6%).

In the red: Abou Kir Fertilizers (-1.1%), Eastern Company (-0.8%) and CIB (-0.6%).