PM — That Star Wars magic

Good afternoon, friends. It appears we’re still some ways away from that end-of-year news slowdown, even though the number of OOO auto-responders we’re getting in our inbox keeps rising by the day.

*** Would the real Enterprise Fantasy World Cup winner please stand up? We’re ready to announce the top finisher of our Fantasy World Cup League and send them a special prize. If you signed up to the league under the nickname Buttoot, get in touch with us at editorial@enterprise.press.

THE BIG STORY TODAY

Chimera to acquire 45% of GB Lease: GB Auto subsidiary GB Capital has agreed to indirectly sell a 45% stake in GB Lease to our friends at Abu Dhabi-based investment firm Chimera Investments for EGP 855 mn, the EGX-listed automotive and finance player said in an EGX disclosure (pdf). GB Capital now owns the remaining 55% of GB Lease, according to the disclosure.

THE BIG STORY ABROAD

The people have spoken: More than half of Twitter users voted for Elon Musk to step down as the platform’s CEO, with the final results of a poll Musk posted last night showing 57.5% of respondents want him out. The tech b’naire has said that he will “abide by the results of this poll,” but it remains unclear whether he will actually follow through. The story is leading the conversation in the international business press this afternoon: Bloomberg | The Financial Times | Reuters | CNBC | The Wall Street Journal.

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

• A new task force will suggest fair prices for up to 15 strategic commodities: The Supply Ministry has set up a committee to determine the “fair price” of a number of foods classed as strategic commodities amid soaring inflation.
• EBRD lends USD 40 mn to Angel Yeast to up local production: The European Bank for Reconstruction and Development (EBRD) is lending USD 40 mn to the Egyptian branch of China-based yeast maker Angel Yeast.
• House gives its final nod to Unified Tax Procedures Act amendment: The House of Representatives yesterday voted through a controversial amendment to the Unified Tax Procedures Act that would allow foreign tax authorities to access individuals and businesses’ financial information.

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It’s the Central Bank of Egypt’s final policy meeting of the year on Thursday, and analysts we surveyed last week expect policymakers to close out 2022 with another king-size 200-bps rate hike to support the currency and tackle rising inflation. Seven of the nine analysts and economists are forecasting the central bank to raise rates, five of which see a 200-bps hike. This would take the policy rate to 15.25%, its highest level since early 2019.

EGX-listed Pachin will brief shareholders on acquisition offers it has received in its ordinary general assembly on Tuesday, 20 December. Dubai-based National Paints Holdings has offered to purchase 100% of the company for EGP 29 per share, valuing it almost EGP 700 mn and far outbidding earlier offers from Universal Building Materials and Chemicals (Sipes) and Saybad Industrial Investment that have since been withdrawn.

☔ TOMORROW’S WEATHER- Expect temperatures to drop 4-5 from today's high of 24°C later this week — in line with the winter solstice on Wednesday — but until then we’re looking at a fairly warmer day tomorrow in Cairo with the mercury expected to hit 23°C during the day before falling to 13°C at night, our favorite weather app tells us. If you’re in Alexandria or elsewhere on the north coast, you should probably pack an umbrella, as there may be some light rain, according to the Meteorological Authority.

Will India and Vietnam overtake China as iPhone manufacturing hubs? Leading Apple suppliers, including Foxconn and Pegatron, are shifting their focus to assembly and packaging of Apple products outside of China, as they look to grow resilient amid a fractured global supply chain, according to a Counterpoint Research analysis cited by Bloomberg. Vietnam alone has attracted 21 Apple suppliers to operate there, the report says, while India has grown smartphone manufacturing by 16% in 2Q 2022. Apple has also made this easier for suppliers by making its product design more modular and transferable, the report noted. At this rate, the Counterpoint analysts expect leading partner Hon Hai Precision Industry to move as much as 30% of its capacity to India, Vietnam and Brazil.

This has been in the making for some time: Employees at Foxconn’s largest iPhone factory in China clashed last month with police during protests over the 200k-worker plant’s handling of a covid outbreak, leading Apple to begin ramping up plans to move some of its production out of the country.

Now that the World Cup is over, Qatar has a lot of tourism + real estate infrastructure to put to use: Football fans exited Qatar en masse following yesterday’s final, leaving empty some of the USD 300 bn-worth of real estate and tourism infrastructure investments the country poured into preparations for the sporting event, Bloomberg reports, citing industry and investment players. These industries — whose capacities were built up in excess of their current demand outside of the World Cup — may end up needing a helping hand from the government until their massive growth is organically absorbed into the country’s economy. “The capacity that got created for this mega scale event will take time to get absorbed, resulting in an economic slowdown or downturn,” Qatar Ins. Company’s chief investment officer said. Several projects remained unfinished in the lead up to the tournament, and have pushed their opening dates. New hotels would have been able to bring in revenues equivalent to 15% of their construction costs had they opened in the middle of the tournament.

Qatar’s population is expected to fall in 2023, as several people that were working on World Cup-related projects leave the country. A 2020 census revealed that about half of the population was made up of low-wage workers who lived in work camps. Qatar is expecting to receive more tourists in upcoming years, targeting 6mn visitors by 2030, triple the number of visitors in 2019. Hotel occupancy rates stood at below 60% now 14-15k new rooms have been opened, further crowding the market.

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Learning the tricks of the movie magic trade: A six-part documentary series on the history of Industrial Light & Magic is now streaming on Disney+. When American visual effects artist Dennis Muren was first tasked with making the Star Wars script come to life by director George Lucas, “I just thought, ‘This is impossible,’” he said. The technology required to do so had not yet been developed. Lucasfilm’s special visual effects, animation, and virtual production division went on to make strides in the industry through innovative technical advancements, earning Muren nine Oscars. The documentary features interviews with iconic filmmakers including Lucas, Steven Spielberg, James Cameron and exclusive behind the scenes footage from the unit's early days working on Star Wars. Industrial Light & Magic went on to make beloved blockbusters including Raiders of the Lost Ark, the Star Wars sequels and Jurassic Park.

⚽ If you’re still woozy from the emotional roller coaster that was yesterday’s World Cup final, you’re not alone. Argentina and Messi defeated defending champion France on penalties after a 3-3 tie in one of the most entertaining World Cup finals.

Not missing a beat: The Egyptian Premier League, which is in full swing today:

Future x Ghazl El Mahalla (5pm)

Smouha x Al Ittihad (5pm)

Pyramids x Aswan (7pm)

ALSO- Why is Al Ahly participating in the 2023 FIFA Club World Cup? Al Ahly has received an invitation from FIFA to participate in the 2023 FIFA Club World Cup in Morocco next February, despite the club having lost the final match of the African Champions League against Morocco’s Wydad. FIFA regulations stipulate that the title holder of the host country’s premier league — in this case, Wydad — must participate in the Club World Cup. Considering Wydad is also the winner of the African Champions League, Africa needs another African team to participate. Although logic would suggest that the CAF Confederation Cup title holder would be the team of choice, in this case it’s Morocco’s Raja, and FIFA regs don’t allow for two clubs from the same country to play in the Club World Cup.

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Room Art Space Garden City is sparking the holiday spirit with a viewing of A Christmas Carol at 9pm tonight.

And across town, Saad Eloud and his band take the stage at Room Art Space New Cairo tonight at 9pm.

Algerian folk music fans aka Raï fans rejoice: Raï-نا is performing Raï favorites like Cheb Khalid hits at The Tap East.

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Like, Comment, Subscribe documents the rise of YouTube: Bloomberg journalist Mark Bergen delves into the second-most visited website in the world behind Google, how it was created, its technology, and the key people behind its inception. The book follows the platform’s journey from its early days as a bizarre and fun yet unprofitable website to its rapid growth, which led to Google acquiring it for USD 1.65 bn 10 months after it was launched. Google brought ads and imposed its metrics on YouTube, replacing some of its employees including moderation teams with machines and algorithms. “The Google way of solving problems is to throw machines at them, not people,” a manager explained to a YouTube employee. It sounds like a pretty standard decision from a tech company, but this approach at times resulted in mishaps such as horror movie ads on children’s nursery rhyme videos. Bergen refers to YouTube’s story as “the story of a new mass media programmed not by editors, artists, or educators but by algorithms,” although humans are very much still calling the big shots.

The EGX30 fell 0.7% at today’s close on turnover of EGP 2.39 bn (57.9% above the 90-day average). International investors were net sellers. The index is up 23.3% YTD.

In the green: Qalaa Holdings (+10.7%), Alexandria Containers and Cargo Handling (+9.2%) and Ezz Steel (+7.8%).

In the red: Egypt Kuwait Holding – EGP (-4.6%), CIB (-3.7%) and Juhayna (-3.0%).

More than half of the worldwide economic growth this century has been fueled by a few large cities that make up less than 1% of the global landmass, according to Pixels of Progress, a new McKinsey Global Institute report. The report takes a new approach at looking at development than similar past studies, dividing the world into over 40k micro regions, a view 230 times more detailed rather than looking at human development through country averages.

Disparities can be obscured by national averages: The wealthiest regions in developing nations frequently more greatly resemble cities in developed economies than their neighboring regions, The Financial Times reports. Porto, the second largest city in Portugal and Mapusa, a small town in the Indian state of Goa had virtually the same GDP per capita in 2019 at USD 33k but at the country level, they are worlds apart. India’s GDP per capita was USD 6.7k in 2019, more than five times less than Portugal’s which stood at USD 34.9k, according to the report. Similarly, the average life expectancy for residents of both Manchester, England and Lima, Peru is 78.5 years. At the national level however, British people lived 6.8 years longer on average than Peruvians did.

And there’s growth concentration in specific clusters: While cities have traditionally played a disproportionately greater role in propelling economic growth, the figures in the report emphasize the extent to which growth was concentrated in certain cities, including Shenzhen and Guangzhou in China, Delhi and Bangalore in India, and Los Angeles and Dallas in the US. The regions that accounted for half of global growth in 2019 were home to about 2 bn people, or 27% of the world’s population. Over 2 bn people lived in blue zones — microregions that had an average income of more than USD 8.3k and a life expectancy of more than 72.5 years over the first 20 years of the 21st century.

Globally, the number of people living in those microregions rose from 1.3 bn in 2000 to 3.5 bn in 2019, with regions that newly made the shift accounting for the majority of that expansion. Between 2000 and 2019, nearly 1.1 bn people in China and about 1 bn people in 75 other nations, including Egypt, Brazil and India, attained the high standard of living associated with the blue zone criteria.

Across the Middle East and North Africa, a total of 290 mn people resided in 1700 blue zones in 2019, up from 55 mn people living in 100 such microregions in 2000. The two countries with the most significant shift to blue zones were Turkey and Iran: With microregions with populations of 62 mn in Turkey and 53 mn people in Iran turning blue by 2019. Other regions that made the shift include microregions in Egypt’s mostly rural El Beheira governorate area and parts of Casablanca in Morocco. The United Nations and several international organizations have supported a number of projects in El Beheira over the past two decades, which has helped boost agricultural output, build up societal infrastructure, improve water supplies and enhance the region's key location along important land and river transit routes.

Cities all over the US continue to be the main contributors to the US’ economic growth, according to a Milken Institute report. They remain the main areas where companies create new jobs and employees receive better salaries, maintaining the nation’s competitiveness in the global economy. A recent trend the report has noted for the second consecutive year is that the country's prominent high-tech hubs are no longer the only areas that create high-paying jobs, indicating that this kind of economic success is extending from the larger coastal cities inwards throughout the country. On the other hand several tech-hubs have witnessed a resurgence including San Jose, Durham, and Chapel Hill, demonstrating the industry’s resilience in the face of the pandemic.

The inequality between different regions within one country has grown over the past 20 years. The most productive areas of a country, which are typically large cities, are now on average twice as productive as the least productive areas, the FT reports, citing data from the Organisation for Economic Co-operation and Development.