The Central Bank of Egypt slashed interest rates 300 bps in a surprise move yesterday evening — the same day that global markets plunged (the Dow was off 13% and the EGX fell a bit more than 7%), volatility hit a peak higher than back during the global financial crisis, both San Francisco and France went on lockdown, and the European Union said it is likely going to close its airspace for 30 days.
Heading into dispatch time this morning, the picture for markets is mixed: Japanese equities posted gains, but shares are slumping in Hong Kong, China and South Korea. Futures suggest the Dow, Nasdaq and S&P will all open in the green later today, while Europe looks set to open in the red.
Take a deep breath and contemplate the meaning of the central bank’s surprise rate cut. Our take: It means the bank is giving the government fiscal room to maneuver without running up double-digit deficits. A rate cut of this magnitude gives space (thanks to lower borrowing costs) to policymakers who need to deal with a potentially wide virus outbreak, support the economy, bail out EgyptAir, and still keep a bullet in the chamber against the unknown. The cut also signals to businesses and citizens alike that their cash is better put to use than it is left in the bank. There’s more, but we think this was the prime motivator.
Take a second deep breath and accept that neither you nor the rest of your team will be as efficient working from home this week (or next) as you have been working at the office. Projects will be late. You’re going to have new or different priorities. Productivity is going to drag (the opposite of what the “work from home movement” would usually suggest). This is natural when the world is topsy-turvey When your team is adjusting to new communications tools. When you’re still figuring out how to manage workflow remotely — and when you have kids at home (and their routines have been destroyed, too).
Now a third: Remember that for the vast majority of us alive today, life will go on. The coronavirus outbreak will resolve, and we’ll be left asking ourselves a whole bunch of new questions. You can get a hint of those questions here, if you’re so inclined: Some ask a taboo question: Is America overreacting to coronavirus?
And remember, if we can preach: Your prime directive right now? Keep your people safe — if a job can be done from home, let it be done at home.
Egypt has now reported 166 covid-19 cases, including 40 new cases confirmed yesterday, the Health Ministry said in a statement yesterday. With the majority of the new cases being Egyptians (35 of the new cases were nationals and five were foreigners), it suggests we’re now seeing community transmission. Eight of the Egyptians were people who had returned from performing the umrah pilgrimage in Saudi Arabia.
Two more people have died in Egypt, including a 72-year-old German national and a 50-year-old Egyptian from Daqahlia governorate who came into contact with the woman who died of the virus on 12 March.
Health Minister Hala Zayed told talk show host Amr Adib that unspecified measures will be rolled out in Daqahlia, Damietta and Minya to help control the outbreak. She declined in the interview to characterize those measures as a lockdown like those seen in Italy and now France (watch, runtime: 33:02)
Egypt is suspending all flights (inbound and outbound) from this Thursday and until 31 March, Prime Minister Moustafa Madbouly decreed yesterday, according to a cabinet statement. People looking to return home will be allowed to do so until noon on Thursday, Civil Aviation Minister Mohamed Manar said, according to Al Shorouk. Madbouly suggested the cost to the airline industry will be around EGP 2.25 bn. El Anani said he believes the opening of the Grand Egyptian Museum, among other initiatives, will help bring tourism back once the global covid-19 crisis abates.
School shut-down could be extended: Education Minister Tarek Shawky told nighttime talkshow host Lamees El Hadidi in a sit-down interview that the two-week shutdown of Egyptian schools and universities will likely be extended (watch, runtime: 3:29).
The World Health Organization is happy with our covid-19 response to-date, with the organization’s Dr. John Gabor telling CNN Arabic that Egypt’s detection system is “strong.” Cabinet posted the video on its Facebook page.
The Sisi administration is preparing a new stimulus package to help the economy. Prime MInister Moustafa Madbouly said it will target both the stock exchange and the real economy. Madbouly’s remarks came at a meeting that included the planning minister and the governor of the Central Bank of Egypt, a cabinet statement said, without offering further detail.
Governors are rolling out local bans on shisha in public places.
Prime Minister Moustafa Madbouly wants many civil servants to stay home, whether they work at ministries, government agencies or state-owned companies. The exception: Those working in healthcare and critical sectors including water and electricity services, a cabinet statement said.
Half the staff at the House of Representatives will be on leave for two weeks starting today. Priority was given to women and to staff with children under the age of 12, Al Shorouk reported.
The Governor of Cairo Khaled Abdel Aal said weekly markets must close and ordered the shuttering of 129 gymnasiums in the capital, Al Mal reports.
We won’t price gouge if you don’t hoard: Some domestic manufacturers have promised not to increase prices in the coming two weeks after consumers rushed to stores in a covid-19-motivated buying spree, said Six of October Investors Association head Mohamed Shaaban said. Factory and retail store owners are asking shoppers to stop stockpiling so as not to mess up supply-demand dynamics, Shaaban said.
Raya Contact Center is the latest business to announce it has implemented a work-from-home policy. The measure is for all employees at the company’s customer support centers in Egypt and UAE, according to Masrawy.
Schools nationwide will undergo deep cleaning starting Friday, according to Egypt Today. Cabinet closed schools for two weeks effective this past Sunday.
GLOBALLY: The European Union is closing its borders at 12 noon today to all non-essential travel.
France is going on lockdown, saying people can only leave home for work, to shop for food or to help the elderly and other at-risk populations, the Associated Press reports. The UK is also urging people to work from home.
Canada is closing its borders to non-citizens / residents. The only exceptions: The immediate family of citizens, plus diplomats, aircrew and (for the time being) Americans, Canada’s CBC reports. “If you’re abroad, it’s time for you to come home,” Prime Minister Justin Trudeau said yesterday.
Non-essential services and businesses are closing the world over. Among the measures now being implemented in one combination or another: shopping hours are being curtailed while museums, houses of worship, bars and non-essential shops are closing in Germany, Morocco, New York and Los Angeles
Covid-19 vaccine trials begin, but it won’t be rolled out for at least a year: The US’ National Institute of Health (NIH) started a coronavirus vaccine trial yesterday, a US government official told the Associated Press. Public health officials estimate that it will take 12 to 18 months for the potential vaccine to be validated and ready for widespread use.
Virus-related deaths outside of China surpassed those inside the country for the first time since the outbreak, with more than 3.3k deaths recorded in countries including Italy, Iran, and Spain as of early yesterday. A total of 3.2k deaths were reported inside China, according to figures compiled by Johns Hopkins University reported by The Wall Street Journal.
Other international covid-19 updates:
- G7 country leaders held a video conference yesterday to discuss a coordinated response to the virus outbreak, officials have said, according to Reuters. Little of substance appears to have emerged other than a pledge to work together and a warning not to hoard any eventual vaccine.
- Saudi Arabia has sent home employees home at all government agencies for a period of 16 days, according to a statement. The decision does not apply to government employees working in health, security, military and electronic security centers.
Demand for oil worldwide has hit a new low as more countries resort to “unprecedented” responses to the covid-19 dilemma, reports Bloomberg. The pandemic is leading traders, executives, hedge fund managers, and consultants to revise their oil consumption forecasts by margins, says the business information service.
Throw in a little oil war with Russia and it’s little wonder, then, that Saudi Aramco is slashing capital spending by as much as 23%, down to USD 25-30 bn from USD 32.8 bn, to make up for falling oil prices, the company said on Sunday, according to the Financial Times. Aramco’s stock price dipped by 2.8% yesterday, marking a record low, having fallen by 13% from its initial listing price. That’s not stopped the company from leaving in place a promise of delivering USD 75 bn in dividends, according to Bloomberg.
Oil prices dipped below USD 30 a barrel yesterday, Reuters reports, and Saudi Aramco said it was “very comfortable” with the price, adding that its plan to increase output to record levels to capture a larger share of the global market will run from April through to May.
Also in KSA: The kingdom has detained hundreds of government officials in a corruption clampdown, Reuters reports. Anti-corruption authority Nazaha tweeted on Sunday that 298 people had been rounded up on charges of bribery, embezzlement, and abuse of power involving USD 101 mn.
Also: Happy Birthday to The Colonel. We miss you, Dad. Every day.