What we’re tracking on 01 March 2018
It’s now March, ladies and gentlemen. The back third of Q1. As our father always told us: Time accelerates as you age.
FIRST LOOK- The EGX recorded a meteoric rise in volume yesterday driven almost entirely by record-setting foreign institutional trading, with foreigners accounting for EGP 3.1 bn of the EGP 4 bn traded. That’s both the highest foreign trading volume of all time and the highest overall mark since March 2008, by our math.
Why the spike? Wednesday was D-Day for the MSCI Egypt Index rebalancing, with Eastern Tobacco coming in and EFG-Hermes swapping out. We spoke to our friend Mohamed Ebeid, Co-CEO of the investment bank at EFG-Hermes, who noted that what was remarkable was that the record-setting volume came from pure trading—no special transactions were executed yesterday.
Institutions like EFG, passive inflows boost Eastern: Both Eastern Tobacco (+1.4%) and EFG Hermes (+4.3%) outperformed a down market, with the former seeing buying coming from passive investors following the index and the latter defying the MSCI index exit with huge active buying from foreign institutions, Ebeid said.
Is it sustainable? Although yesterday’s volume was an anomaly, Ebeid expects the daily traded average in the next period to tick up to the EGP 1.5-2 bn range from the EGP 1-1.2 bn range at which it’s been lingering.
***A handful of us are in Dubai from Sunday attending the EFG Hermes One on One and then meeting with friends later in the week. We may have a few meeting slots free in the second half of the week. Email email@example.com if you’d like to talk about having coffee.
The Central Bank is expected to announce foreign reserve figures “within days,” a banking official had told Youm7. Finance Minister Amr El Garhy said last week that proceeds from the recent USD 4 bn eurobond sale had already hit Egypt, bringing the country’s net FX reserves to around USD 41 bn.
Egypt’s M2 money supply was up 20.45% y-o-y in January to EGP 3.25 tn (USD 185 bn), the CBE said on Wednesday, according to Reuters.
The CBE also held yesterday its biggest EGP variable rate CD auction since the EGP float, with EGP 205 bn on offer, coming on the back of the 100 bps rate cuts earlier this month.
The Investment Ministry released yesterday its Annual Report (pdf) for 2017. The report includes a recap of legislation passed as well as of loans and grants received to finance development projects. The report shows foreign direct investment growing 14.5% y-o-y to USD 7.9 bn in FY2016-17. The report claims that the first phase of the ministry’s long awaited investment map has been released, though we’ve seen no sign of it online.
President Abdel Fattah El Sisi is scheduled to inaugurate today the new cities of New Alamein, New Obour, New Ismailia today, Youm7 reports.
You may want to double back for a second look at VanEck Vectors Egypt Exchange-Traded Fund (EGPT), the only Egypt ETF trading in the US. The ETF “is up more than 3% this year and nearly 19% over the past 12 months,” says FXStreet. And while Egypt “is not for the faint of heart … there are signs of improvement in the Egyptian economy,” the report notes, adding that, “EGPT’s three-year standard deviation of 27.9% is nearly double the comparable metric on the MSCI Emerging Markets Index.”
Egypt is among the top five banking markets in Africa in terms of growth and profitability. Angola, Nigeria, South Africa, and Morocco, along with Egypt account for 68% of the continent’s total banking revenue pool, new research by McKinsey and Company finds. The report, which says Africa is the world’s second-largest banking market in terms of growth, separates the continents banking markets into four archetypes: Relatively mature, fast-growing transition market, sleeping giants, and nascent market. Egypt belongs to the first category along with South Africa. “These markets have higher branch penetration…they also have higher credit bureau penetration of 22% of adults, double the African average.” The report also projects that around 60% of total retail revenue growth in the next five years will come from Egypt, Morocco, South Africa, Ghana, and Nigeria. Click here for the full report (pdf).
We’re working on something new: We are partnering with our friends at CIB Wealth to produce a custom newsletter that will go out to CIB Wealth’s clients and our readers once a month. We calling this “Your Wealth” and will be discussing in it how to get the most out of your time, your business and your wealth—and maximize time with your family. We’ll be sending out the first issue of Your Wealth this weekend. If you you’d prefer not to continue receiving it each month, feel free to unsubscribe from it—you’ll still receive your regular issue of Enterprise every weekday.
Norway’s USD 1 tn sovereign wealth fund loves volatility: Norway’s sovereign wealth fund thinks a spike in volatility may help its long-term allocation target of 70% in equities worth an estimated USD 40 bn. “Increased volatility is as much of an opportunity as a challenge,” Yngve Slyngstad, CEO of Norges Bank Investment Management, which runs the fund, said in an interview with Bloomberg TV (watch, runtime: 4:14). The last time the fund so an expansion in its equity holdings — raising it to 60% from 40% — was right before the global financial crisis, when it picked up stocks for cheap.
Is the Chinese state behind Geely’s accumulation of a stake in Mercedes-Benz owner Daimler? That’s the suggestion in the Financial Times, which also notes that Zhejian Geely Holding’s also owns online trader Saxo Bank, among other companies.
Meanwhile, the global business press is heading into the weekend obsessing over all things American, with front-page headlines from both sides of the pond zeroing in on Hope Hicks’ resignation as White House communications chief after admitting she told “white lies” for the president (FT | WSJ), the dwindling power of Jared Kushner (FT | WSJ), and a move by Walmart, Dick’s Sporting Goods and others to stop selling weapons to people under the age of 21 (FT | WSJ | Reuters). The latter really seems to have sparked the imagination of the Journal, which warns that “CEOs choose sides on gun control at their own risk,” while Business Insider says businesses are simply tracking to where consumers in America are moving on social issues.
“Meet me there” closes tomorrow: Hind El Hafez, our friend and the noted jewelry designer and artist, is helping organize the Cairo Artists Collective’s group exhibition “Meet Me There,” which wraps up tomorrow in Zamalek. The event features her latest collection of contemporary art jewelry and has as its special guest Spain’s Estela Saez Vilanova. Want to attend? Pop an email over to firstname.lastname@example.org for the details.
70/20/10—something all of us should give some thought to this weekend, whether it’s in our business or personal lives. As Evernote CEO Chris O’Neill reminds readers of the Globe and Mail’s Last Word column : “Google famously talks about 70/20/10—70% of time, energy and resources goes into the core product, 10% goes into adjacencies or extensions, and 10% goes into those moonshots. It’d be great if Canadian companies took 10% of their resources and said, ‘We’re going to [take some long shots], and some, if not most, of them will fail, but the one or two that do succeed will more than offset the investment.’” The rest of the as-told-to interview is worth reading, too.
The Oscars are on Sunday, and PricewaterhouseCoopers hasn’t been fired. The accounting giant will be in the wings again this year, and promises to hand over the right envelope to the right person at the right time this year after last year’s gaffe, the Wall Street Journal reports.