PM — It’s vacation time. See you all after Eid

Well, friends, we’ve made it through the last workday of Ramadan and we’re being rewarded with what we think is a very well-deserved extended Eid break.

All of next week will be a bank holiday in observance of Eid El Fitr, with the country’s banks closed from Sunday, 1 May through Thursday, 5 May. The EGX will also be closed for the full week, the bourse confirmed in a news bulletin today.

The private sector won’t be taking the entire week off for Eid, unlike the public sector. Folks at private (non-bank) businesses will officially get Labor Day (that’s Sunday, 1 May) and the first two days of Eid (Monday and Tuesday) as paid vacation days, the Manpower Ministry has said.

Enterprise will be bridging the week (along with, we assume, the vast majority of the country). We’ll be back in your inboxes with the first post-Ramadan edition of EnterpriseAM at the usual time on Sunday, 8 May.

UPDATE- Businesses now have until Sunday, 8 May to submit their corporate tax filings, after the Egyptian Tax Authority pushed the deadline to account for the weeklong Eid break. The previous deadline would have seen businesses file their returns by this coming Saturday, 30 April.

SO, WHEN DO WE EAT? You’ll be breaking your fast at 6:30pm CLT this evening in the capital city, and fajr prayers are at 3:41am.

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SIGN OF THE TIMES- BTC is becoming an official currency in the Central African Republic, making it the first country in Africa and the second in the world after El Salvador to do so, CNBC reported. A bill legalizing BTC and other cryptocurrencies was adopted unanimously by the country’s parliament last week. Obed Namsio, chief of staff of President Faustin-Archange Touadera, told Reuters that the Touadera backs “supports this bill because it will improve the conditions of Central African citizens.”

THE BIG STORY TODAY

Non-oil exports rose by 20% y-o-y in 1Q2022, reaching USD 9.17 bn, according to a Trade and Industry Ministry statement. The sectors accounting for the biggest portions of export revenues: Printing and packaging at USD 312 mn (up 59% y-o-y), readymade garments at USD 625 mn (up 44% y-o-y), building materials at USD 1.9 bn (up 35% y-o-y), textiles at USD 279 mn (up 32% y-o-y), engineering and electronics at USD 977 mn (up 31% y-o-y), chemical products and fertilizers at USD 935 mn (up 23% y-o-y).

THE BIG STORY ABROAD-

Some of Europe’s largest energy firms are acquiescing to Russia’s demands to make payments in RUB, as they are faced with the threat of a natural gas cutoff to the continent, the Financial Times reported. Energy companies in Germany, Austria, Hungary and Slovakia are planning to open accounts at Gazprombank in Switzerland to meet the Russian requirement, according to people familiar with the matter. The crisis is already dividing the bloc, as several nations are pushing the European Commission to tighten the language of its guidance to eliminate ambiguities allowing for these loopholes to remain, Bloomberg reports, citing people familiar with the matter.

GCC to the rescue: Rich-oil countries in the Middle East are trying to fill Europe’s energy gap with more oil flows to the continent, with tanker data and fixture reports cited by Bloomberg indicating that fuel flows from the GCC to Europe are set to grow almost 130% this month to 379k barrels per day. This would be the highest figure since October 2020, and would fill the gap of a166k barrel per day plunge in European imports from Russia.

Don’t forget that Egypt could also have a role to play in plugging the gap: Egypt inked an agreement with Italian energy firm Eni earlier this month to boost Eni’s gas production here in Egypt and increase our liquefied natural gas (LNG) exports to Europe. The agreement will boost Eni’s LNG exports to Italy and the rest of Europe to 3 bn cubic meters this year. EU Executive Vice-President Frans Timmermans also signaled last month that the bloc is looking to up its imports of LNG from Egypt in the short term as the EU works to diversify its energy supplies.

IN OTHER INT’L DIPLO NEWS-

Turkish President Tayyip Erdogan will head to Saudi Arabia today in a two-day visit after receiving an invitation from Saudi King Salman, reports Reuters. The two sides are set to discuss ways to increase economic and other cooperation. This is the latest sign that the two countries are repairing ties after Turkey dropped the Jamal Khashoggi murder trial and transferred it to Saudi.

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

• Support talks with IMF reach technical stage as lender pinpoints key reforms: Talks between Egypt and the IMF on a fresh support package have reached the “technical stage,” Jihad Azour, the multilateral lender’s head of Middle East and Central Asia, told reporters at a press briefing yesterday.
• Elsewedy Electric partners with China's Wolong Electric on electric motors + service center: The two manufacturers signed an agreement to distribute electric motors, establish one of the region's biggest service centers, and explore ways to develop the local industry.
• Scatec to issue green bonds worth USD 335 mn: Norway’s Scatec will issue USD 335 mn worth of green bonds to refinance its six solar plants in Benban. The European Bank for Reconstruction and Development (EBRD) is subscribing to almost a third of Scatec’s green bond issuance, the lender confirmed today. The EBRD will take up about USD 100 mn worth of the issuance, in addition to providing a USD 30 mn standby liquidity facility for other investors participating in the sale.

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???? CIRCLE YOUR CALENDAR-

The fixed customs exchange rate introduced last month following the EGP devaluation will be lifted. Greenbacks used for importing essential items such as basic commodities and materials used for manufacturing are currently changing hands at a fixed rate of EGP 16, a move introduced to minimize exchange rate volatility in the wake of the devaluation.

☀️ TOMORROW’S WEATHER- The warm weather continues this weekend, with daytime highs of 36-38°C and nighttime lows of 24°C on Friday and 16°C on Saturday, our favorite weather app tells us. Temperatures will start cooling on Wednesday and Thursday, falling to 31°C.

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Making public transportation available without charge actually wouldn’t do good for the environment: By taking public transportation instead of driving a car alone, an individual can save up to 30% of carbon dioxide emissions, according to the American Public Transport Association. In efforts to promote climate-friendly policies, several US transit agencies have been experimenting with dropping their bus fares, to boost ridership and decrease emissions — but the effective end result actually wasn’t a net improvement, environmentally speaking, according to a Bloomberg report citing transport program data. Not charging fares did end up increasing public transport users, but these included commuters who would usually walk or bike towards their destination, or not travel in the first place due to the cost — all of whom were originally net zero emitters but became contributors to the emissions from public transport. The experiments also failed to sustainably lock in car owners, who continued to rely on their own cars as convenience and comfort trumped a zero-cost ride.

A new mysterious liver disease affecting children is slowly making its way across the globe: Japan is the latest country — the first in Asia — to detect a case of a liver disease that has so far been detected in over 170 children, most of whom are in the UK, CNBC reports, citing the Japanese Health Ministry. The disease — which presents like hepatitis, or liver inflammation — was first detected in January, and has since found its way from the UK to the US, Israel, and now Asia, with health experts studying it for potential links to covid-19, according to the World Health Organization. Symptoms of the disease include nausea, diarrhea, jaundice and yellowing of the eyes and skin. Experts are exploring whether the disease could have appeared as a result of a lack of exposure to common viruses — known as adenoviruses — due to covid-related lockdowns and restrictions, which could have triggered a severe immune response in children. Of the 170 cases, one death has been reported, and 17 children have required liver transplants.

Apple has launched its Self Service Repair online store, allowing iPhone users to repair their mobiles themselves, according to a press release. The store will offer more than 200 parts and tools customers can use to repair the iPhone 12, iPhone 13 and third-generation iPhone SE including the screen, battery and camera. Customers can also rent tools in the case that they don’t want to purchase them and get credit for returning a replaced part for recycling. This comes following US regulators putting pressure on Apple to give consumers more control over their products. The program is now live in the US, but will expand to Europe later this year and also add parts to fix certain Mac computer models.

Don’t expect to save money by DIYing your phone, with iPhone screens going for as much as USD 300. For example, buying parts to fix an iPhone 12 Mini on your own would cost only USD 3 less than having your out-of-warranty device fixed at an Apple Store — plus you’d still have to pay for tools, writes the Wall Street Journal.

Twitter advertisers are worried the platform could turn into a hotbed of toxicity and abuse following Elon Musk’s strategy of liberalized speech, writes the Financial Times. Twitter wrote to its advertisers, promising them that their ads will not be placed alongside harmful or offensive content, according to an email seen by the FT. The move signals that Musk’s takeover could hurt Twitter’s advertising business, with many of the brands having appreciated that the platform had taken steps to tackle online hate and extremism in recent years. It is still to be seen how Musk plans to run the company from now on.

???? ON THE TUBE TONIGHT-

(all times CLT)

It’s been a while since we’ve had a gripping show and Gaslit is living up to expectations, as it reframes the Watergate scandal. Based on the first season of the podcast Slow Burn by Leon Neyfakh, the political thriller stars A-listers Julia Roberts and Sean Penn. The limited series sheds light on former US President Richard Nixon’s subordinates and the whistleblowers in the scandal that revealed multiple instances of power abuse from the administration and the cover-up that followed.

⚽ We might be stepping out (temporarily) for Eid break, but there’s plenty of football to keep you occupied over the next several days. We’ve got a handful of games tonight, the most anticipated of which is Manchester United clashing with Chelsea in the Premier League at 8:45pm.

Also today, the UEFA Europa League semi-finals kick off at 9pm, with an all-German final on the cards as Rangers clash with RB Leipzig while West Ham plays against Eintracht Frankfurt.

It’s also game night in Egypt, with Zamalek going against PortSaid’s Al Masry at 9:30pm

TOMORROW-

There will be more games on the home-front at 9:30pm, with Misr Lel Makasa v Future, Pharco v Smouha, and Enppi v Al Bank Al Ahli.

La Liga will See Sevilla v Cádiz at 9pm.

ON SATURDAY-

Far from being boring, Saturday’s going to be a football-filled day, with six games in the Premier League, four in La Liga and Serie A, and three in the Egyptian Premier League.

In the Premier League: Newcastle United v Liverpool at 1:30pm; Aston Villa v Norwich City, Southampton v Crystal Palace, Watford v Burnley, and Wolverhampton v Brighton all at 4pm; and Leeds United v Manchester City at 6:40pm.

In La Liga: Deportivo Alavés goes head to head against Villarreal at 2pm, with Real Madrid v Espanyol at 4:15pm, Valencia v Levante at 6:30 pm, and Athletic Club v Atletico Madrid at 9pm.

Serie A sees Cagliari v Hellas Verona and Napoli v Sassuolo at 3pm, Sampdoria v Genoa at 6pm, and Spezia v Lazio at 8:45 pm.

Moving to Egypt: We’re up for three games at 9:30 pm: Alexandria’s Ittihad v Ghazl Al Mahalla, Ceramica Cleopatra v Ahly, and Talea’ El Geish v Ismailiy.

ON SUNDAY-

The (probable) last day of Ramadan will see the following Premier League matches: Everton v Chelsea and Tottenham v Leicester City at 3pm, and West Ham v Arsenal at 5:30pm.

In La Liga: Elche v Osasuna at 2pm, Granada v Celta de Vigo at 4:15pm, Rayo Vallecano v Real Sociedad at 6:30pm, and Barcelona v Mallorca at 9pm.

Shifting to Serie A, Juventus will play against Venezia at 12:30pm, while Empoli will clash with Torino with AC Milan against Fiorentina in the afternoon at 3pm. Later during the day, Udinese will play against Inter Milan at 6pm, with Roma v Bologna at 8:45pm.

As it preps for Eid, Egypt will see Zamalek v Eastern Company, Al Masry v Al Moqawloon Al Arab and Gouna v Pyramids. All three games will kick off at 9:30pm.

???? EAT THIS TONIGHT-

From Apple Strudel to laugen bread, this new German bakery will bring Berlin to you: Stadt Mille has recently opened its doors in Cairo Festival City, offering some German favorites. Don’t miss out on their laugens (which is a pretzel-like bread) that come in flavors such as cheese, bacon, sausage, and Hawaii. For more savory snacks, they also have croissants and pates. However, it’s their sweet selection that really shines, with an apfelstrudel, apple danish, cherry or lemon puffs, lime cake, honey cake, or English cake. You can also get non-ethanolic beer on tap from their counter.

???? OUT AND ABOUT-

(all times CLT)

Dawar Arts is hosting Taba2 Koshari — a music event that features a variety of different sounds such as choir, Indian instruments, and classical Arab music. The event will kick off today at 8:30pm.

Saudi writer Amal El Harby is leading an intimate night of storytelling and comedic reflections tomorrow where the writer retells her experiences as a woman in Saudi. You can get tickets to the event at TicketsMarche.

Attend a drum circle at Gusour Cultural Center tomorrow which promises to rid you of your negative energy. The drum circle will be led by Mostafa Bakkar at 8pm.

Al Qubba Palace is hosting fitar and sohour for the final days of Ramadan in its Palace Tent. The palace was built during the reign of Khedive Ismail and took six years to be constructed due to the unique royal architecture.

The long-awaited Maroon 5 concert is taking place during Eid vacation on Tuesday, 3 May at the Pyramids of Giza. It’s the band’s first time in Egypt and tickets start at EGP 2.3k. You can still purchase them at TicketsMarche. Frontman Adam Levine spoke up about the event on The Ellen Show (watch, runtime: 10:55) and expressed his excitement for performing at such a unique venue. “It’s not one of the things, I think, as a musician you think is feasible or possible. It just seems so, kind of, out of this world to be able to do it,” Levine said.

EARNINGS WATCH-

Abu Qir Fertilizers’ bottom line rose 185% y-o-y in 9M 2021-2022 to EGP 6.96 bn, the company said in an EGX disclosure (pdf). This comes on the back of a 91% y-o-y increase in revenues to EGP 12.04 bn.

Juhayna’s bottom line rose 23% y-o-y in 2021 to EGP 526.39 mn, according to an earnings release (pdf). The juice and dairy company’s revenues also rose during the fiscal year, increasing 17% y-o-y to EGP 8.81 bn.

MARKET NEWS-

Banque Misr has purchased 1.125 bn shares — around 42.8% — in Banque du Caire in a EGP 6.97 bn block transaction under a transfer of ownership agreement, a disclosure to the bourse (pdf) showed. Masrawy cites three separate banking sources close to the state-owned banks as saying that the sale is part of an ownership restructuring plan, with no new share sales made to any third party. The restructuring will see the stake owned by Banque Misr’s investment arm Misr Capital in Banque du Caire transferred directly to Banque Misr. Enterprise was unable to reach representatives from either of the two banks in time for dispatch.

CI Capital will distribute dividends on two dates this year, the company said in an EGX disclosure (pdf) today. Shareholders will receive EGP 0.125 per share on each distribution date, with the first distribution date on 19 May and the second on 29 September.

MARKET ROUNDUP-

The EGX30 rose 3.1% at today’s close on turnover of EGP 1.21 bn (27.4% above the 90-day average). Foreign investors were net sellers. The index is down 7.5% YTD.

In the green: GB Auto (+10.1%), Heliopolis Housing (+9.3%) and Madinet Nasr Housing (+9.1%).

In the red: Eastern Company (-3.6%), Rameda (-2.2%) and Housing and Development Bank (-0.1%).

US real yields turning positive to raise pressure on EMs: The inflation-adjusted 10-year yield on US treasuries turned briefly positive last week, sounding alarm bells among emerging-market money managers, Bloomberg reports. US-based Franklin Templeton said it would cut its positions in high-yield debt, while Fidelity International is betting against EM currencies, as the threat of positive US real rates begins to boost the USD and triggers outflows from riskier EMs. Many emerging economies are already dealing with inflationary and budgetary pressures caused by rising food and energy prices on the back of the Russia-Ukraine war.

But is it an indicator of headwinds peaking? A small number of strategists believe that positive real rates could cause the Fed to dial back the hawkishness in a good move for EMs. “I definitely think U.S. real yields crossing the zero-line is an important milestone on the path towards a peak in the monetary headwinds emerging-market investors are facing in 2022,” said one strategist at Nordea Investment. “Positive real rates would also bring us closer to peak Fed hawkishness, which is the ultimate requirement for risk appetite to stage a meaningful comeback.”

Surging inflation has pushed many EM policy rates into negative territory: Some 35 of the 42 nations tracked by Bloomberg currently have negative real policy rates. This includes Egypt, where a 10.5% inflation rate in March pushed Egypt’s real rate into negative territory despite the 100-bps rate hike last month.

The good news? The Fed (probably) won’t sanction an even faster tightening cycle next month. Fed officials are yet to give public backing to Federal Reserve Bank of St. Louis President James Bullard’s suggestion that a huge 75-bps hike might be needed to tame inflation when the central bank meets at the beginning of May. Federal Reserve Bank of Cleveland President Loretta Mester has come out against the proposal, while Fed Chair Jerome Powell hasn’t commented on the matter.

When the dust starts to settle, Latin America could be the top choice for bond buyers: The fact that some Latin American central banks started monetary tightening long before Russia’s invasion of Ukraine, as well as appreciating regional currencies, suggests that these countries might be the first to hit peak interest rates this cycle. That creates chances in short-term sovereign bonds as yield curves steepen, Bloomberg reports. Traders have their eye on Brazilian, Chilean, and Colombian debt in particular.

But predicting inflation is a loser’s game: Rate hikes won’t peak globally until inflation is brought under control — and as the aftermath of Russia’s invasion of Ukraine has demonstrated, it’s very difficult to predict the impact of global events on prices. “The margin of error is way too high to call for peak inflation,” one EM debt-watcher told Bloomberg.

Here in Egypt we could still be in store for another rate hike in addition to the surprise 100 bps increase the Central Bank of Egypt (CBE) announced last month. Analysts say the CBE will be watching the Fed’s May meeting and market developments closely for cues. Ratings agency Fitch sees Egypt making a further 300 bps in rate rises by FY 2023-2024.