We’re going to start this morning with a global headline that sends a big signal to the global economy — and to policymakers around the world: Someone in the White House managed to convince The Donald to listen to the scientists and extend social-distancing measures until the end of April. The US president had previously said he wanted the US open an “raring to go” by mid-month.
Worth a listen this morning: Central Bank Governor Tarek Amer’s appearance on TV to talk about the impact of covid-19 on the economy. We have highlights and the link in this morning’s Speed Round, below.
Market update: The EGX30 closed down 1.5% yesterday in a session marked by anemic volumes, with turnover some 30% below the trailing 90-day average. Asian markets are squarely in the red in the first trading day of the week, with major indices in South Korea, China, Hong Kong, Japan and India all down at least 1% in early trading as we headed toward dispatch this morning. Futures suggest a lower open for US and European markets.
PSA- Heavy, dusty winds will roil most of the country today and sandstorms could strike the northwest coast, the Egyptian Meteorological Authority said. Areas most likely to be affected include Cairo, the Nile Delta, the Mediterranean coast and the northern regions of Upper Egypt. Look for highs of 29°C today, with the evening cooling to around 24°C. The warm weather is set to continue through the weekend and spike above 30°C in the capital on Saturday and Sunday.
And one quick reminder: Thursday is interest rate day, with the Central Bank of Egypt’s Monetary Policy Committee set to meet.
COVID-19 IN EGYPT-
The Health Ministry has reported 33 new cases of covid-19 yesterday evening, all Egyptians, taking the total to 609. Another four fatalities — all Cairenes aged 58-84 — brought the death toll to 40. A total of 132 people have fully recovered so far and been discharged from hospital and 182 people have tested negative after treatment in hospital.
Mosques will remain shut down indefinitely, Religious Endowments Minister Mohamed Gomaa said. The ministry ordered mosques to close their doors for two weeks as of 21 March in a bid to curb the covid-19 outbreak. The Coptic Church had also suspended masses and other activities in churches at the same time; it has yet to say whether it, too, will extend the shutdown.
Market data provider EGID has launched a new online platform ‘E-Maglis’ that enables shareholders to take part in meetings and vote remotely, according to a statement (pdf). The system will allow companies to continue operating as usual through the pandemic while at the same time supporting the government’s “digital transformation” strategy, EGX boss Mohamed Farid told Enterprise. EGID is an EGX-owned company.
The Financial Regulatory Authority has instructed microlenders to consider delays on a case-by-case basis of up to 50% of the value of monthly installments for struggling clients.
The Federation of Egyptian Industries has handed the government a long shopping list of measures it wants to see enacted to help businesses through the pandemic, the local press reports. It calls a six-month postponement of the deadline to file and pay taxes for FY2019, exempting companies from paying income tax and social insurance for three months, raising the domestic market allocation for those who have export restrictions to 50% from 20%, and expediting the payment of overdue export subsidies. The FEI also wants the government to cover two weeks of wages for any factory that closes down to promote social distancing.
We think some measure of tax relief is a good idea, but we’re not certain we would start filling the FEI’s shopping list in full or in part right now. Egypt’s economy isn’t feeling the same pinch as, say, Italy, Spain or New York — and we need something in reserve in case (a) we do or (b) the status quo lingers for months rather than weeks.
State-paid healthcare workers will receive a 75% allowance on top of their wages, an Ittihadiya statement said. President Abdel Fattah El Sisi allocated EGP 2.25 bn for the initiative and set up an emergency fund for as support for medical professionals, including doctors working in university hospitals, during the covid-19 outbreak. Doctors will receive an additional EGP 700, physiotherapists EGP 500 and nurses EGP 400, using a payment system related to their basic wages.
Foreign Minister Sameh Shoukry said he is working with the Civil Aviation Ministry to repatriate Egyptians stuck abroad. Speaking in an interview on Al Mehwar TV, Shoukry said the Madbouly government is focused on Egyptian tourists stranded abroad and students studying overseas.
An EgyptAir flight brought back 340 Egyptians from Kuwait yesterday, the local press reports. Arrangements are also being made to bring back Egyptians in Tunisia, according to a cabinet statement. Other evacuations are in the works to bring home citizens from the UK, Saudi Arabia, UAE, Oman, Lebanon, and Jordan this week.
An Egyptian star in a rare “good news” covid story: Egyptian-American doctor Nermeen Botros has been named “Hero of the Day” by the New York Post for working punishing 80-hour weeks since the start of the crisis and for her courage during these unnerving times.
Investors lap up nine-month t-bills, balk at yield on three-month notes: A government bond auction held yesterday was a tale of two halves, as investors oversubscribed to the EGP 10.5 bn nine-month offering but largely rejected the offered yield on three-month bills. The central bank sold more than EGP 15.6 bn of nine-month bills at a yield of 13.611%, but only sold EGP 24 mn of its EGP 4 bn three-month issuance as investors demanded a 13.585% yield — more than 100 bps higher than the rate accepted by the CBE.
ON THE GLOBAL FRONT-
Corporate America anxious about first quarter earnings as uncertainty grows: US corporate earnings forecasts are now much less hopeful as companies revise their 2020 financial targets in light of the gradual shuttering of the US economy, says Reuters. Analysts project a 2.9% y-o-y fall as we approach the earnings season for the first quarter, which begins in mid-April. A stark 7.1% drop may follow in quarter two, and 0.5% for full-year 2020, with only a slight recovery priced in for the third and fourth quarters, according to IBES data from Refinitiv, which is said to be one of the more optimistic forecasts.
This gloomy view comes as the recorded number of cases in the US have now surpassed those of Italy and China, and as measures to contain the virus have temporarily shut down businesses and led to a wave of layoffs. We’re keeping an eye out for US industry surveys and employment data due this week, which CNBC says “will likely paint a bleak picture of how much the first weeks of the coronavirus shutdown have already hit the economy.”
And as revenue streams are threatened, bond issuance by investment grade corporates has soared to USD 244 bn this month, making it the second largest monthly record after the USD 252 bn sold in September, says the Financial Times. US companies led the pack, selling USD 150 bn worth of new corporate paper to “outlast any drag on revenues.”
In other international covid-19 news:
- Saudi Arabia quarantines Jeddah: Saudi Arabia has banned people from entering and exiting Jeddah governorate, tightening lockdown measures as the death toll in the kingdom yesterday doubled to eight. (Reuters)
- Spain strengthens measures, extends lockdown: Spain has ordered all non-essential workers to remain in their houses for two weeks, the latest government measure to contain the outbreak which has now infected almost 79k people. (Reuters)
- Drive-thru testing in the UAE: Abu Dhabi has opened a drive-thru testing facility that will test people for covid-19 in just five minutes. (Twitter)
There is an overwhelming global surfeit of oil and logistical services are “struggling to cope,” as transport, businesses and factories have ground to a virtual standstill amid continued covid-19 lockdowns, Bloomberg reports. Demand is at an unprecedented low, with the 100 mn barrels of oil usually consumed per day slashed by a quarter in recent weeks, traders and analysts estimate.
It doesn’t come as much of a surprise, then, that oil fell below USD 20/bbl in early trading today: WTI fell as much as 7.6% to lows not seen since November 2002 this morning. The US crude benchmark traded as low as USD 19.92 in early trading while Brent — which is on course for its worst quarter ever — fell 5.1% to USD 23.66/bbl.
A three-month caffeine fast? Why on earth would you do that? Author Michael Pollan, who went on such a fast for research purposes to explore the effect of caffeine on the human body, offers the Wall Street Journal some compelling reasons: namely, it vastly improves the quality of your sleep. The man speaks sense, and the idea of sleeping like a teenager again is appealing, but we won’t lie: There is zero chance of us putting this into practice anytime soon.
*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed. Blackboard appears every Monday in Enterprise in the place of our traditional industry news roundups.
In today’s issue: We look at what schools and universities learned from the past few weeks of online education, and whether online learning tools can be adopted en masse and become the norm in a post-covid world.