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Thursday, 17 August 2017

What we’re tracking on 17 August 2017

It’s interest rate day, and consensus is you can expect the central bank to leave rates on hold: The Central Bank of Egypt’s Monetary Policy Committee is meeting today to decide on interest rates. A Reuters poll of economists found them expecting the CBE to leave rates unchanged after last month’s surprise 200 bps bump.

Ratings agency Moody’s is set to publish tomorrow its update for Egypt. Trading data suggests room for an upgrade of “at least one notch,” according to the Goldman Sachs report we highlighted yesterday. Pharos Holdings agrees and sees potential for an upgrade to B2 from the current rating of B3, supported by three factors: improved economic growth rate results and outlook, narrower overall and primary deficits, and lower external vulnerabilities. Pharos’ full report is here (pdf).

Cabinet will be convening today to discuss the executive regulations of the Investment Act before sending the document off to the Council of State (Maglis Al Dawla) for a final legal review, Prime Minister Sherif Ismail said yesterday, according to Al Shorouk. The cabinet is also wrapping up its mid-year performance review, which it intends to present to President Abdel Fattah El Sisi and the House.

The Finance Ministry was expected to announce tax revenue figures for FY2016-17 this week. Vice Minister of Finance Amr El Monayer gave a preview on Monday.

Are we (globally) in a bubble? On an otherwise slow news morning, three pieces have us thinking today about what we might expect on the global macro backdrop for the rest of this year and into 2017. If you read only one piece, make it the FT’s The perils of calling the peak of the equities bull run, which notes that “investors are struggling to work out when or if a crash will come” as “today’s stock markets are overvalued.” It’s a particularly solid and interesting piece with one of the best ledes we’ve read in a piece of financial writing in ages.

From there, stay with the salmon-colored paper and go read EM rally seen rolling on as valuations remain sound, which quotes the head of EM debt at BNP Paribas Asset Management as noting, “We are five quarters into the emerging market rally and there are still a lot of naysayers. At every turn there are 1,000 reasons why it’s overdone or we are going to have a pullback or a collapse is coming. We think this is the real deal and will be a multiyear rally in emerging market assets. We see unequivocal evidence that investors are investing back into EMs and they are starting from a low base in terms of exposure to emerging markets.” Then top it off with Bloomberg’s assertion that the Global Economy Looks Set for a Year of Faster, Firmer Growth.

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