Bring it on, 2020 — you’ve only got 10 days left to [redacted] with us. Such is the sentiment this morning at Enterprise World Headquarters in the People’s Democratic Republic of Maadi.
The big story as you start your workday: Global markets are in freakout mode over a mutant strain of the coronavirus that causes covid-19. The virus, which some have estimated is as much as 70% more transmissible than the previously dominant strain, is running amok in the United Kingdom, prompting nations around the world to reimpose border restrictions.
BUT FIRST, don’t panic. It’s forgivable to feel a bit edgy given everything that we’re about to tell you. So before you read on, take a deep breath and listen up: This new mutant strain? Scientists don’t think it’s any more deadly than the version of the virus now going around. The “real danger” is that because it appears to be more easily transmissible, it has the potential to overwhelm hospitals faster. And that “70% more transmissible” bit? It could be entirely accurate — but it’s also based on modeling, not a retrospective study, so there’s a chance it may not be as bad.
But, but, but… Mutations in something as fast-replicating as a virus are totally normal — and most do not make bugs more deadly. What’s more, there’s evidence the world over that outcomes in covid-19 patients are largely improving thanks to shared knowledge of what treatment protocols work in which types of cases. The key is not to have medical professionals overwhelmed with waves of cases — hence the emphasis on masking (yes, we’re looking at you) and why so many countries are in freakout mode this morning.
The sense of panic you’re picking up on in the global press? It’s amplified by the fact that many reporters are writing in countries that are in (or soon going into) April-May style lockdowns.
BORDERS ARE CLOSING- Kuwait and Oman joined Saudi Arabia yesterday in shutting their air, sea and land borders yesterday. In what feels like a replay of April, Morocco, Tunisia, and Algeria have also banned flights from the UK, and Israel is not letting in any foreigners other than diplomats. At least 40 countries are believed to have closed their airspace to flights coming out of Britain.
Egypt and the UAE are yet to follow suit. Meanwhile, Turkey, Germany and Switzerland have suspended flights from South Africa to block the spread of another mutant strain that’s not wildly different from the British one.
The Madbouly government is taking stock of whether it’s going to have to run repatriation flights again. The Emigration Ministry is now keeping an eye on citizens who are stuck in countries that have sealed off their borders, according to a statement. Flights into Cairo International Airport continue to run as normal, says assistant aviation minister Bassem Abdel Kareem.
The new strain was all over last night’s talk shows. Everyone from Kelma Akhira’s Lamees El Hadidi (watch, runtime: 7:50) to Masaa DMC’s Eman El Hosary (watch, runtime: 6:51) weighed in. The takeaway from the coverage: The new strain is cause for concern everywhere, and safety precautions in Egypt will be enforced more strictly as we face our own second wave.
YESTERDAY’S CASE COUNT- The Health Ministry reported 718 new covid-19 infections yesterday, up from 664 the day before. The ministry also reported 32 new deaths, bringing the country’s total death toll to 7,130. It’s the first time since August that the daily death toll has broken the 30-person level.
SILVER LINING #1- Egypt is now ranked 24 in Bloomberg’s December Covid Resilience ranking, which rates global economies worth over USD 200 bn based on 10 metrics including virus growth rates, the capacity of the local healthcare system, freedom of movement and lockdowns on the economy. Egypt moved up one spot this month, the business information service said, without providing further details.
SILVER LINING #2- Doses of the Sinopharm vaccine are being distributed to vaccination centers across the country based on each governorate’s population and needs under the Health Ministry’s supervision, Al Masry Al Youm reports, citing ministry sources.
Markets are, naturally enough, in freakout mode. Most days, any talking head’s bid to draw a link between “x” and the movement of the stock market is about as accurate as haruspicy — the reading of sheep’s entrails. Then there are days like yesterday, where what’s going on is as obvious as the nose on our face.
The EGX30 index ended yesterday’s session down 2.8%, with domestic investors leading the selloff in the sharpest one-day plunge since October, when index heavyweight CIB dragged the exchange down 3.5% on news that its chairman, Hisham Ezz El Arab resigned following a regulatory probe.
The benchmark index is now down 24.2% year-to-date — edging past 2015 (-21.8%) as the most recent annus horribilis for the EGX. EGX-listed companies erased nearly EGP 26 bn in market cap yesterday.
For context: The EGX30 was up 6.5% last year, well below the nearly 74% rally of 2016 and the nearly 21% it gained in 2017. And we’re lagging regional peers: The Tadawul is up nearly 2% YTD, while the Dubai Financial Market is down 11%.
Some market watchers are already saying we can see bottom, with Beltone Financial Executive Chairman Maged Shawky telling El Hekaya’s Amr Adib last night that it’s unlikely we’re going to see a market meltdown on the same scale as we did at the outset of the pandemic. Most markets clawed back a portion of their losses throughout the trading day, suggesting that it will only take “a couple of days” before the situation stabilizes, especially as positive news such as the upcoming stake sales by military-affiliated companies buoys sentiment, Shawky said (watch, runtime: 1:52).
The exchange suspended trading for 30 minutes early in the session after the broad-based EGX30 triggered the +/-5% circuit breakers for the first time since the pandemic-induced sell-off in March.
Industrial stocks led the selloff, with paper manufacturing, building materials, textiles, and shipping and transportation posting the steepest losses. Travel and leisure, construction, and real estate were also hard hit. Banks and non-banking financial services were less affected overall, but the Export Development Bank and Beltone Financial were the EGX30’s biggest losers. Index heavyweight CIB finished down 0.7%.
Most other major Middle Eastern and global markets also ended in the red as the new variant led to concerns of a wider spread. The slump came with a 2.8% fall in Brent crude prices. We have all the details in Planet Finance, below.
Shares across Asia are in the red this morning, though the selloffs are sub 1% by most major indexes. Futures at dispatch time point to a mixed open in both Europe and on Wall Street later today.
CIRCLE YOUR CALENDAR-
It’s interest rate week, and rate watchers are calling a pause: The Central Bank of Egypt’s Monetary Policy Committee meets to review rates this Thursday for its final sit-down of the year. All 10 analysts and economists we surveyed expect rates to be left unchanged, with some pointing to protecting the carry trade as a key reason the CBE could keep rates on hold.
We’re a little over a week away from the Egypt-UK post-Brexit agreement coming into effect on New Year’s Eve. The agreement is designed to unlock a spate of UK investments in Egypt, including in the Suez Canal Economic Zone, oil and gas, manufacturing, agribusiness, healthcare and education sectors.
Also on New Year’s Eve: Time runs out for EGX-listed companies to comply with requirements from the Financial Regulatory Authority to have at least one woman sitting on their boards of directors. Just under half of the EGX30’s constituents still have all-male boards.
PSA- The deadline for car owners to comply with traffic regulations to install a RFID electronic sticker on their cars is also on 31 December.
Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.