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Sunday, 28 January 2018

What we’re tracking on 28 January 2018

With tomorrow’s deadline for nominations fast approaching, politics and the presidential election topped the conversation on Egypt in both the local and the foreign press over the weekend, and we can expect it to continue. Plenty of election drama took place during the three-day break, with President Abdel Fattah El Sisi officially filing paperwork to get his name on the ballot and lawyer Khaled Ali withdrawing. Election drama in the news reached a fever pitch with an alleged attack on former Central Auditing Organization head Hisham Genena. All of that and more in the Speed Round.

Reports on the economy, on the other hand, continue to be positive, with Moody’s praising the proposed Bankruptcy Act on Thursday. The ratings agency said “the law was credit positive for Egypt’s banks, as it will provide more options to [handle] viable, but troubled, companies and make loan workouts faster and more flexible,” Reuters reports.

This comes as the House of Representatives is expected to hold its final plenary debate on the act today ahead of its vote on the law, Ahram Gate reports. The bill, a key element of the Sisi administration’s economic reform program, would effectively decriminalize bankruptcy and allow companies more time and options for restructuring by introducing mechanisms to help settle commercial disputes outside the courtroom and simplify bankruptcy proceedings.

Also today in the House: The Economics Committee plans to hold what Consumer Protection Authority head Atef Yacoub hopes will be its final discussion of the new Consumer Protection Act. The law would, among other things, force retailers to print prices on products, Yacoub tells Al Mal. The Federation of Egyptian Industries plans to hold a meeting today on the law and will send its recommendations to the House, according to the newspaper.

President Abdel Fattah El Sisi arrived in Addis Ababa yesterday to attend the 30th African Union Summit, which wraps up tomorrow, Ittihadiya said in a statement. The president is expected to participate in a closed session with the union’s heads of state to discuss institutional reforms and efforts to establish an African freetrade zone. El Sisi also chaired yesterday a session on terrorism at the Peace and Security Council, of which Egypt is the president of throughout January. Ethiopian Prime Minister Hailemariam Desalegn had reportedly suggested holding a tripartite meeting with Egypt and Sudan on the sidelines of the summit to resolve the gridlock over the Grand Ethiopian Renaissance Dam, as we noted last week.

Deregulating the skies over Africa: The AU Commission is set to launch its Single African Air Transport Market (SAATM) at the summit today. The project provides for full liberalization of market access between African states, free exercise of traffic rights, elimination of restrictions on ownership and full liberalization of frequencies, fares and capacities. Egypt is on board with SAATM.

It is shaping up to be a busy week both regionally and globally, too, with no sign the business and econ news agenda will slow after Davos:

Is the “anti-corruption” drive in KSA coming to an end? After an unusual interview with Reuters to prove he hadn’t been jailed or tortured, celebrity investor Alwaleed bin Talal has been set free, sparking speculation about what assets, if any, he transferred to the state to secure his release. Alwaleed has returned home and will “remain at the helm of his company,” according to multiple reports quoting unnamed Saudi government officials. The news is front page this morning in the Wall Street Journal and the Financial Times.

Who took agreements? The latest are Waleed Al-Ibrahim, co-founder of MBC with Saleh Kamel, and retail giant Fawaz Al Hokair, according to Bloomberg. There’s widespread speculation that Al-Ibrahim may have handed control of MBC to the state; prior to the corruption crackdown, he had been in sale talks with representatives of Crown Prince Mohammed bin Salman.

HSBC has turned down a leading role in Doha’s new USD bond issuance as it navigates how to do business in the GCC without angering the Arab quartet, Reuters claims, citing four sources with knowledge of the development.

The World Bank’s chief economist is leaving “effective immediately” a little more than a year after taking the job, the Financial Times reports. Paul Romer, the noted US economist, was said to be feuding with staff over everything from “diktats on grammar and brevity in reports to serious questions about methodology.”

Global investors have given emerging markets plenty of love over the last couple of weeks, with inflows to EM equity and bond funds at their highest levels in about 18 months, according to a Financial Times report citing industry data. EM equities are up 8.7% so far this year in USD terms, EM sovereign bonds are flat, and EM local currency bonds are up 4.4% in USD terms. EM currencies, meanwhile, continue to do well against the USD.

This comes as pundits are trying to make sense of what’s happening globally: Growth is reasonably synchronized across major economies, but there are worrying signs that economic growth in low-income frontier countries is no longer expected to outstrip that of middle-income EM. Hit up the New York Times for the first point, where Peter S. Goodman writes that “every major economy on earth is expanding at once, a synchronous wave of growth that is creating jobs, lifting fortunes and tempering fears of popular discontent.”

The counterpoint: The idea that low-income frontier countries may not catch up to their middle-income peers “calls into question the logic of foreign investment in poorer countries, if their typically higher volatility and poorer liquidity are not balanced by faster growth,” Steve Johnson writes for the Financial Times. The story tiers Egypt along with Nigeria, Pakistan, Bangladesh, Kenya and Ethiopia as “lower-income” countries, while the middle-income group includes Brazil, Russia, India, South Africa, Mexico and Turkey.

The Donald made (relatively subdued) mumblings about playing nice with others, telling Davos that “America First” doesn’t mean “America alone.” That will last until the next late-night / early-morning twitter binge, but CNBC and CNN have coverage if you like.

Trump is sending Secretary of State Rex Tillerson to visit “shithole countries” better known as ‘our continent,’ telling African leaders in a note that Tillerson will be visiting unspecified counties in March, the WSJ notes.

Finally: Flu season is ravaging the United States this year, “driving influenza infections to levels not seen since the swine flu pandemic of 2009,” Bloomberg reports, saying that by the time this flu season is over, “more than 50k Americans will be dead.” Allow us, friends, to remind you that flu doesn’t know nationalities: If it’s in the US, it’s on its way here (if hasn’t arrived already). Take precautions.

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