Tuesday, 22 December 2020

Mutant virus market meltdown? Thanks, 2020.

TL;DR

WHAT WE’RE TRACKING TODAY

Markets are freaking out over a mutant virus, but you know to stay calm, right?

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.

enterprise

M&A WATCH

Egypt’s largest-ever M&A goes kaput

Big Red isn’t going to rebadge as STC: Vodafone Group has terminated discussions with the Saudi Telecom Company (STC) over the proposed sale of its 55% stake in Vodafone Egypt, the UK company said in a statement on Monday that provided no reason for the end to talks.

The collapse of talks comes just a few days after Vodafone Group CEO Nick Read met with President Abdel Fattah El Sisi in Cairo. Read told the president the company intends to maintain a presence in Egypt and increase investment in the country, including installing 5G towers in the new administrative capital and using Egypt as a tech hub for Africa.

“We believe that the Egyptian government is committed to an optimal framework for the telecoms sector, which will enable Vodafone Egypt to deliver on the country’s vision of digitization and financial inclusion and create a technology hub to support our growth in the African region,” Read said in the statement yesterday.

Vodafone is now planning to invest EGP 5 bn in network upgrades, in part to support the rollout of new spectrum, our friend Noha Saad, head of external communications at Vodafone Egypt, told Kelma Akhira’s Lamees El Hadidi. The meeting’s “positive outcome” also included discussion of key issues including the operator’s need for more spectrum, Saad said (watch, runtime: 13:04).

Talks appeared to be moving ahead in September after a series of delays: STC and Vodafone had vowed to continue the acquisition talks despite a deadline set by an MoU signed in January expiring in September. The Saudi firm made a USD 2.39 bn non-binding offer for a majority stake in January, valuing Vodafone’s Egyptian operations at USD 4.4 bn. STC tried to trim its offer following the pandemic and the crash in oil prices which Vodafone was reportedly close to agreeing to, before STC announced in September that the talks had fallen through “due to misalignment with relevant parties.”

The talks had been postponed at least twice before: a 90-day extension to the MoU signed in January was agreed in April, and a 60-day postponement was announced in mid-July because of “logistical challenges” stemming from the pandemic.

Vodafone was a willing seller as the company exited non-core markets to focus on Europe and Africa starting in 2018 when Read took over. The company has sold its operations in New Zealand and Malta in the past 18 months and plans to IPO its towers business in the new year.

There remains uncertainty what state-owned telecoms giant Telecom Egypt will do. TE holds 44.7% of Vodafone Egypt and had the right of first refusal to make a counter-offer to STC’s bid. While some had suggested TE lacked the firepower to make an offer, some analysts have suggested that the parent company of fourth mobile operator We was in talks with as many as five banks that had expressed interest in backing the transaction.

Also unclear is what the Egyptian Competition Authority might say about any future bid by TE for Vodafone Egypt. Although the Egyptian Competition Authority doesn’t yet have the power to block an acquisition, TE’s takeover of Vodafone Egypt would raise questions about its effects on market competition. Already the sole owner of We, the acquisition of Vodafone would give TE control of two of the four mobile network operators active in Egypt.

Most likely scenario: TE is happy to remain a partner to Vodafone Plc and collect a steady stream of dividend income.

OTHER M&A NEWS- Odin bails on El Nasr Civil Works: Odin Investments is no longer interested in acquiring Madinet Nasr Housing and Development’s (MNHD) El Nasr Civil Works after the real estate developer last week rejected its offer, the Financial Regulatory Authority said (pdf) Sunday. The consortium launched a mandatory tender offer to acquire 90% of El Nasr last week for EGP 11 per share, which MNHD tossed out claiming the valuation didn’t reflect the company’s earnings and financial position.

ALSO- Kayan Sustainable Development is looking to buy 90% of ANFI, the Alexandria National Company for Financial Investment. Kayan wants to acquire 90% of ANFI from Abu Dhabi Islamic Bank (ADIB) subsidiary, the bank said yesterday in a regulatory filing (pdf).

PRIVATE SECTOR

Trade + transparency = private investment, says World Bank

Egypt’s private sector is yet to feel the benefits of the government’s economic reforms, and although the economy has stabilized in recent years, policymakers must enact further structural changes if the country is to attract more private investment, the World Bank and the International Finance Corporation have said in a new report (pdf). Launched yesterday, the paper reveals that private investment’s share of the economy, while rising, continues to lag behind the historical average despite strong economic growth and improving public finances. And while Egypt is a top destination for FDI in Africa, inflows remain low by global standards and are falling.

Exports haven’t reacted to the EGP float: Although the currency float at the end of 2016 has made a dent in the country’s trade deficit, Egyptian companies have struggled to compete internationally, revenues haven’t matched those of peer countries, and the number of exporters has remained “critically” low, with only 9% of manufacturers directly selling overseas.

But why? Making clear that Egypt has the capacity to evolve into a regional trading hub, the bank said that the tariff and non-tariff barriers are standing in the way of local companies becoming internationally competitive and integrating into global value chains. Import tariffs — which currently average 19%, making the economy the second most-protected in the world — stifle local competition, drive up prices and incentivize companies to focus their efforts domestically. And a range of non-tariff barriers — including slow customs clearance, a complex bureaucracy and below-par infrastructure — hold back the development of local industries and dampen foreign investment.

Leveling the playing field: Private and foreign investment has also been held back by the raft of state-owned enterprises (SOEs), whose presence in almost every sector “feeds the perception of overstretch,” the report argues. Selective tax exemptions, weaknesses in antitrust legislation, and a lack of public information about SOEs raise concerns about the integrity of market competition. “The main message is not to say that SOEs are a bad thing, but it is difficult for investors to make educated decisions on market and sector conditions due to the absence of public financial information,” lead writer of the report and World Bank senior economist Hoda Youssef told reporters yesterday.

Making contracts stick: The inconsistent enforcement of contracts in Egyptian courts make the business environment even more unpredictable for companies, which can never quite be sure about their legal standing. The costs are high, delays often extensive and enforcement inconsistent, providing uncertainty to foreign businesses and putting the judicial system out of reach for most small firms. “This is an important deterrent for the private sector and FDI as legal scrutiny and predictability constitute key conditions for a sound business environment,” the report says.

Transparency and trade = the keys to success: Improving transparency of the state’s economic footprint and cutting barriers to trade will go a long way to transforming domestic industries and attracting foreign direct investment, the World Bank said. Leveling-up transport infrastructure, streamlining customs and tariffs, and modernizing the court system will also help to draw more capital into the country. The private sector also needs to be playing more of a role in policymaking, the bank said, calling for the government to engage more with firms as it embarks on stage two of the reform process.

Making the business environment more private sector-friendly is one of the main objectives of the latest IMF program. The USD 5.2 bn standby loan agreed with the IMF in the summer is partly conditioned on further structural reforms designed to promote private sector growth, including improving transparency of SOEs and cutting red tape.

*** Stayed tuned: Tomorrow we publish our extended interview with the author of the report: Hoda Youssef, senior economist at the World Bank.

BANKING

Why banks in Egypt remain profitable: Chapter XXII

Profits in the banking sector have grown this year despite an acceleration of the central bank’s easing cycle, a survey conducted by the local press showed. Thirteen banks saw their net income and interest income increase during the first nine months of 2020 even as central bank cut rates by 300 bps in March. Just five banks saw their bottom line shrink during the period, according to the survey, which excluded state-owned giants National Bank of Egypt and Banque Misr.

The leaders: Smaller players including Egyptian Gulf Bank (up 43%), ٍSAIB Bank (+35%), Al Ahli Bank of Kuwait (+33%), and Al Baraka Bank Egypt (+27%) saw their net profits grow the fastest. Heavyweights Banque du Caire and CIB were also in the top 10, with net income increasing 25% and 22%, respectively.

Operating income from loans and core operations at banks mostly decreased. But overall, only two banks were worse off following the interest cuts — Faisal Islamic Bank and Abu Dhabi Islamic Bank. Both faced higher interest expenses and unchanged income.

What is happening here? Banks in Egypt lend less to the private sector. A large part of their income comes from investment in government debt, and according to the survey banks stepped up their holdings of long-term bonds during the height of the pandemic in 2Q. This approach has helped them remain financially sound despite the pandemic raising expectations of bad loans and forcing them to ramp up loan loss provisions. That said, Fitch Ratings recently raised a few red flags on why such “weak internal capital generation” might not be sustainable long-term.

IN OTHER BANKING NEWS- BdC and Alexbank have scrapped two of their high-interest savings certificates and are mulling reintroducing them at lower yields, Masrawy reports, citing unnamed employees at the banks. BdC had introduced three- and five-year certificates paying 13% and 13.5% interest and Alexbank three-year certificates with interest of up to 11.75% a few months back. The banks had been offering the certificates to use as collateral for borrowing. The decision to scrap them comes after state-owned NBE and Banque Misr in September stopped issuing the 15% CDs they had introduced at the onset of the pandemic.

ECONOMY

Citi bullish on Egypt

GDP to return to pre-pandemic levels next year -Citi: Egypt’s economy is expected to grow by 4.6% in FY2020-2021 and 5.4% the following year, according to a Citibank report picked up by the local press. It said it expects tourism to continue rebounding in 1H2021 and offset some of the economic damage wrought by the pandemic, coupled with a recovery in Suez Canal revenues amid an expected rise in global oil prices. The bank is keeping an eye on the extent to which the government will push for growth, especially with the planned privatization program. Maintaining an inflation rate between 6-12% was initially not difficult after the EGP float, even after the Central Bank of Egypt (CBE) kicked off its monetary easing cycle. However, inflation has become more of a challenge as the CBE looks to keep it above the lower band of 6%, suggesting the central bank’s main policy priority moving forward will be inflation.

Gov’t estimate more conservative: The government said last month that it expects the economy to grow at a 3.5-3.8% clip in the current fiscal year, a higher forecast than the 2.8-3.5% clip forecast by the Finance Ministry earlier that month. Analysts have agreed: The IMF, Fitch, and Deutsche Bank have all predicted GDP to come in at 3.5% this year.

enterprise

ENTERPRISE+: LAST NIGHT’S TALK SHOWS

The #1 topic on the airwaves last night: The new strain of coronavirus, as we report in What We’re Tracking Today, above.

The diversity of the incoming House of Representatives also featured prominently on the talking heads’ agendas, with each of Lamees El Hadidi (watch, runtime: 25:51) and Al Hayah Al Youm’s Lobna Assal (watch, runtime: 22:36) sitting down for discussions on the new class of MPs.

Also on the airwaves last night:

  • Mid-year exams will be spread out between 10 January and 5 February to limit the number of students who are present in testing centers on any given day, Education Minister Tarek Shawki said. (Lamees El Hadidi on Kelma Akhira | watch, runtime: 5:55)
  • Nurseries aren’t being shut down to curb the spread of covid-19, and could instead face smaller capacity limits if several outbreaks are reported, Social Solidarity Minister Nevine El Kabbaj said. (Lamees El Hadidi on Kelma Akhira | watch, runtime: 8:06)
  • The Federation of Egyptian Banks earned an Award of Excellence from the Union of Arab Banks, federation head Mohamed El Etreby said. (Eman El Hosary on Masaa DMC | watch, runtime: 2:32)

ENTERPRISE EXPLAINS

Enterprise Explains: Mobile Wallets

The use of digital wallets (or e-wallets) has surged in recent years as innovation continues to change the payments landscape. The trend gained steam in 2020, with the pandemic creating a boom in demand for  digital financial services — especially in emerging markets, which have long remained wedded to cash and were in need of a push towards financial inclusion.

But what are digital wallets, and how do they work? Think of them as tech-enabled pocketbooks. They’re “digital” in the sense that they store information in the cloud and “mobile” because many of them operate via a smartphone app.  

Digital wallets have a number of different uses:

  • #1- It’s your wallet, but lighter: In essence, digital wallets are places to store and safeguard your credit cards, business cards, and money virtually. People can link their bank accounts, driver’s licenses, ID documents, health cards, loyalty cards, and more to a digital wallet. Instead of having to physically reach for items from a physical wallet, your mobile phone (being the faithful companion and servant it is) does the job for you seamlessly. 
  • #2- Buy stuff: All the money- and non-money-related info stored in a mobile wallet can be passed to merchant terminals that support near-field communication (NFC). Many mobile wallets also allow you to make QR code payments if the merchant doesn’t support NFC.
  • #3- ID: Besides allowing you to make in-store purchases with vendors and online payments, many mobile wallets also serve as virtual IDs to verify the age and identity of their holders. 
  • #4- Pay your mates: Digital wallets can be used to split a restaurant bill, transfer money to a nagging cousin halfway across the country, and pay for private services. Typically, they allow small peer-to-peer payments between normal people doing normal things.
  • #5- A store for your bus tickets: Many public transportation systems around the world allow mobile wallet holders to pay for or display tickets in metro and bus stations. 

They also come in different shapes and sizes:

Independent mobile wallets, offered by tech and payment companies, are the most popular globally and the largest category in terms of active users. It includes Big Tech (Apple Pay, PayPal, Samsung Pay, Amazon Pay, and Google Pay), and smaller or locally-oriented players including India’s Paytm and Singapore’s GrabPay. Alibaba’s Alipay and WeChat’s wallets were the largest in the world in February (because, China).

Telecom-backed wallets, as the name suggests, includes platforms developed by mobile companies. Those wallets can be topped up, or used to withdraw money from ATMs, for payments to other wallets, and for online purchases. In many countries, mobile operators that developed wallets were eventually licensed as virtual banks. This trend gained prominence in Africa, which, as is the case in Egypt, has a mobile phone penetration rate higher than access to traditional banks. India also developed a whole new model known as “payment banks” based on telecom-backed wallets.

Bank-issued wallets are issued directly by a commercial bank. In its conventional form, this type of wallet doesn’t need to be charged as it’s linked straight to bank accounts. Some banks offer the service to non-customers as well, in which case the wallet would function like a regular cash account. Banks here in Egypt are offering the service to unbanked customers as a way to promote financial inclusion. 

Here at home, mobile network operators were the first to launch digital wallets, with Vodafone Cash being the most active. Banks recently entered the scene, and Cairo-based telecoms app Raseedy became the first in the country to roll out an independent wallet. Digital wallets in Egypt are widely used for P2P transfers and bill payments. Those issued by banks often also allow holders to obtain virtual credit cards for online purchases. 

Apple Pay, Google Pay, and other global platforms are not yet supported by our banking system here in Egypt.

The CIB Smart Wallet was among the first bank-issued wallets in the country. Those looking to set up a wallet with CIB only need a valid national ID card, even if they don’t have a bank account. Other bank-issued wallets in Egypt include the National Bank of Egypt’s Phone Cash, Alexbank’s Ma7fazty, and BM Wallet. If a wallet is not linked to a bank account, e-payments platforms including Fawry and Aman or a CIB ATM can be used to charge the balance. The CBE directed banks to issue digital wallets at no charge and removed transaction fees in a bid to promote e-payments at the onset of the pandemic. The directive was renewed in September.

Regulations in Egypt require digital wallets to be linked to mobile numbers. The mobile number serves as a unique identifier, and each mobile number is limited to a single wallet, with a maximum of three wallets per person. 

Want to know more?

Entrepreneur Handbook has a take on why digital wallets are booming.

EGYPT IN THE NEWS

It’s all quiet in the foreign press for Egypt this morning. Rejoice, and move along.

ALSO ON OUR RADAR

TE, Orange Egypt clear up commercial disputes + extend cooperation on transmission services: State-owned landline monopoly Telecom Egypt signed agreements with Orange Egypt to clear unspecified “commercial disputes” and establish a framework for future conflict resolution, according to a cabinet statement. The two telcos also signed a mobile-to-fixed termination agreement, as well as an annex to extend an existing contract pertaining to international gateway services until 2022.

Other things we’re keeping an eye on this morning:

  • The government has denied it has plans to privatize state-owned spinning and weaving companies after online rumors claimed it was considering offering them up to investors.
  • A judge has ordered businessman Abdallah Saad, whose company developed a gated community along the Cairo-Alexandria Desert Road, to pay the state EGP 2.8 bn on charges of misusing public funds.
  • Small-scale property owners are getting an additional three-month extension on late payment fines for residential properties developed by the New Urban Communities Authority.
  • Egypt is looking to import 400-500k tonnes of sugar in 2021 once it lifts a temporary ban in place to protect the local industry, Reuters reports.
  • Renewable power generation company Lekela Power has installed the first wind turbine in its 250 MW capacity West Bakr wind power project.

PLANET FINANCE

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After months of stalled progress, US congressional leaders finally agreed on a new USD 900 bn stimulus bill — which will be the second-largest aid package in US history, following the USD 2.3 tn stimulus bill passed in March, Reuters reports. The package includes doling out a round of USD 600 checks, as well as adding USD 300 to weekly unemployment payments. Non-covid measures also include protection from surprise medical bills, among other things, the Wall Street Journal reports. The stimulus package is part of a USD 1.4 tn spending bill to finance government programs until next September.

But some say the stimulus is a day late and (several) USD short, with unemployment on the rise and the US economy USD 1 tn smaller than it would have been without covid-19, Reuters reports. Economists agree that unemployment payouts are an effective way to kickstart the economy, they are less enthusiastic about the program’s aid to small businesses, which proved inefficient as relief under the first stimulus program in March.

Citigroup and Morgan Stanley overtook JPMorgan as the Middle East’s top dealmakers, Bloomberg reports. Buoyed by its entry into Saudi Arabia, as well as its work on placements for Egypt’s Hikma Pharma and the UAE’s Network International Holdings, Citigroup is ending the year as the top dealmaker for IPOs. Morgan Stanley leads in takeovers, having advised on the USD 18 bn merger of Saudi Arabia’s National Commercial Bank and Samba Financial Group gave it an edge. Transaction activity in the Middle East has slowed since last year, which saw the USD 30 bn IPO of Saudi’s Aramco, as well as the company’s USD 70 bn acquisition of a stake in Saudi Basic Industries.

Next year could be another challenging one for Dubai’s real estate market, property developer Damac Chairman Hussain Sajwani tells Bloomberg. The main risk is if developers start “dumping,” or flooding a market already in excess supply with new properties in hope of selling “another few hundred villas or apartments,” Sajwani said.

Some of the UK’s green investment funds aren’t quite so green: A third of UK climate funds have investments in oil and gas companies, putting pressure on regulators to tackle so-called “greenwashing,” where fund managers over-egg their green credentials to tap into the increasingly lucrative ESG market, the Financial Times reports, citing research by the CommonWealth think tank.

The world’s largest sovereign wealth fund has entered the age-old active vs passive debate: The new head of Norway’s SWF is pushing to actively manage the fund’s portfolio, an unorthodox position in an industry that has historically opted for passive investing, the Wall Street Journal reports. Newly-appointed manager Nicolai Tangen says he believes active management would boost returns and open the door to involvement with companies, while his critics — bemused by some of the arrangements agreed by the central bank and the hedge fund manager — are pushing back on the idea, arguing that returns offered by active investment don’t justify the extra costs.

Down EGX30 10,582 -2.8% (YTD: -24.2%)
Down USD (CBE) Buy 15.61 Sell 15.71
None USD at CIB Buy 15.62 Sell 15.72
None Interest rates CBE 8.25% deposit 9.25% lending
Down Tadawul 8,539 -1.7% (YTD: +1.8%)
Down ADX 5,073 -0.8% (YTD: -0.1%)
Down DFM 2,461 -3.9% (YTD: -11.0%)
Down S&P 500 3,695 -0.4% (YTD: +14.4%)
Down FTSE 100 6,416 -1.7% (YTD: -14.9%)
Down Brent crude USD 47.74 -2.8%
Down Natural gas (Nymex) USD 2.70 -0.1%
Up Gold USD 1,884.20 +0.1%
Down BTC USD 22,884.80 -2.7%

The EGX30 fell 2.8% yesterday on turnover of EGP 1.6 bn (15% above the 90-day average). Domestic investors were net sellers. The index is down 24.2% YTD.

In the green: CIRA (+0.14%).

In the red: Export Development Bank (-9.8%), Beltone Financial (-9.1%) and Egyptian Iron & Steel (-9.0%).

AROUND THE WORLD

TAKING STOCK- At least 200 organizations, including gov’t agencies and companies around the world, have been hacked as part of a suspected Russian cyber-attack of widely used software program SolarWinds. The final number is expected to rise seeing as up to 18k SolarWinds’ customers received the malicious update through an undetected backdoor.

The US commerce and energy departments and Microsoft are among those compromised alongside other US, UK, Israeli and Canadian gov’t agencies and firms — with the hackers gaining access to everything from corporate secrets to covid research. The US Cybersecurity and Infrastructure Security Agency issued an alert that the hackers “posed a grave risk to federal, state and local governments, as well as critical infrastructure and the private sector.” The true scale of the attack is still unquantified and Russia has denied allegations of involvement. Bloomberg and the Financial Times have the story.

Welcome to the age of Cyberwar? Incoming White House Chief of Staff Ron Klain said the Biden camp is considering penalties that go beyond sanctions, Reuters reports. “It’s not just sanctions. It’s steps and things we could do to degrade the capacity of foreign actors to engage in this sort of attack,” Klain said on CBS’ “Face the Nation.”

Western countries have yet to provide evidence that Russia is behind the attack, but the consensus in those quarters appears to be that Cozy Bear — an activity sponsored by Russian intelligence — led it.

ON YOUR WAY OUT

AI: Between boredom and danger: Your ever-so-useful AI may find the time to turn malevolent if you leave it with too much time on its hands. It will scratch its chin and ponder its own psychology, which could open the floodgates for all sorts of unexpected misbehavior. While a little time on its hands is good for AI, allowing it to improve its smarts, too much could lead it down a road with dangerous and unpredictable consequences, argues this Scientific American piece.

CALENDAR

December: Egypt-US Trade and Investment Framework Agreement (TIFA) talks.

December: A meeting to finalize membership and trading rules governing Egypt’s Commodities Exchange (Egycomex).

23 December (Wednesday): Prime Minister Moustafa Madbouly will deliver the keynote address at the 19th edition of Dubai’s Arab Media Forum, held virtually this year.

24 December (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

25 December (Friday): Western Christmas.

31 December (Thursday): Egypt-UK post-Brexit trade agreement to take effect.

31 December (Thursday): Deadline for car owners to comply with traffic regulations to install a RFID electronic sticker on their cars.

31 December (Thursday): Deadline for EGX-listed companies to comply with regulations requiring at least one member of their boards of directors be a woman.

1Q2021: The Annual Egypt Automotive Summit will be held.

1H2021: Egypt’s Commodities Exchange (Egycomex) will begin trading.

January 2021: Expo to promote auto natgas transition strategy.

January 2021: US Treasury Secretary Steven Mnuchin is set to visit Egypt.

1 January 2021 (Friday): New Year’s Day, national holiday.

7 January 2021 (Thursday): Coptic Christmas, national holiday.

13-31 January (Wednesday-Sunday): Egypt will host the 2021 Men’s Handball World Championship at the Giza Pyramids.

Mid-January: Local expo to display natural gas-powered and dual-engine vehicles for Egypt’s car replacement program.

17 January 2021 (Sunday): A court will hold a postponed hearing to look into an appeal by Syria’s Anataradous against an arbitration ruling in favor of Amer Group and Amer Syria in case 445 of 2019.

25 January 2021 (Monday): 25 January revolution anniversary / Police Day.

25-29 January 2021 (Monday-Friday): The World Economic Forum’s “Davos Dialogues” will take place virtually.

26-28 January (Tuesday-Thursday): Future Investment Initiative, Riyadh, Saudi Arabia.

28 January 2021 (Thursday): National holiday in observance of 25 January revolution anniversary / Police Day.

4 February 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

6-18 February 2021 (Saturday-Thursday): Mid-year school break.

20 February 2021 (Saturday): The CBE’s Monetary Policy Committee will meet to review interest rates.

18 March 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

12 April 2021 (Monday): First day of Ramadan (TBC).

25 April 2021 (Sunday): Sinai Liberation Day.

29 April 2021 (Thursday): National holiday in observance of Sinai Liberation Day.

29 April 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

3 May 2021 (Monday): Sham El Nessim.

6 May 2021 (Thursday): National holiday in observance of Sham El Nessim.

12-15 May 2021 (Wednesday-Saturday): Eid El Fitr (TBC).

18-21 May 2021 (Tuesday-Friday): The World Economic Forum’s annual meeting will be held under the theme of “The Great Reset” in Lucerne-Bürgenstock, Switzerland

31 May-2 June 2021 (Monday-Wednesday): Egypt Petroleum Show, Egypt International Exhibition Center, Nasr City, Cairo.

30 May-15 June 2021 (Wednesday-Thursday): Cairo International Book Fair.

1 June 2021 (Tuesday): The IMF will conduct a second review of targets set under the USD 5.2 bn standby loan approved in June 2020 (proposed date).

17 June 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

24 June 2021 (Thursday): End of the 2020-2021 academic year.

26-29 June 2021 (Saturday-Tuesday): The Big 5 Construct Egypt, Cairo International Convention Center

30 June- 15 July 2021: National Book Fair.

30 July-3 August 2021 (Thursday-Monday): Eid Al Adha, national holiday (TBC).

5 August 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

16 September 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

1 October 2021-31: March 2022 (Friday-Thursday): Postponed Expo 2020 Dubai.

28 October 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

13-17 December 2021: United Nations Convention against Corruption, Sharm El Sheikh, Egypt.

16 December 2021 (Thursday): The CBE’s Monetary Policy Committee will meet to review interest rates.

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