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Wednesday, 21 March 2018

What we’re tracking on 21 March, 2018

Random thought of the morning: Don’t underestimate the amount of cash Egyptians have squirrelled away under mattresses. From a Reuters piece on Al Futtaim saying it will be committing additional investment to Egypt (details in Speed Round, below): “The company is expecting sales [in Egypt] this year to reach EGP 4.5 bn compared with EGP 2.9 bn the previous year.” It’s just the latest sign we’re picking up that wage catch-up and the sheer size of the informal economy are seeing consumer sentiment improve significantly faster this year than many had expected. Consumer and consumer-related companies with we’re speaking are all guiding for good first quarters (even accounting for the low base effect) and are substantially more optimistic in their FY2018 outlooks than they were at the start of the year.

Trade and Industry Minister Tarek Kabil heads to Kigali today to sign a pan-African trade liberalization agreement, according to a ministry statement. The Continental Free-Trade Area (CFTA), whose main objective is “to create a single continental market for goods and services,” was set to include all 55 member states of the African Union, but Nigeria backed out at the last minute, saying it needs more time to review the terms, according to a statement picked up by BBC. Uganda also pulled out at the last moment.

The agreement would create a market of 1.2 bn consumers with an aggregate GDP of USD 2.5 tn, CNBC says, quoting AU chair and Rwandan President Paul Kagame as reminding us all that “less than 20% of Africa’s trade is internal.”

Moody’s sees Egypt, Kenya, and South Africa as the countries most likely to benefit from the CFTZ, according to Reuters. The ratings agency says the pact is a step toward capitalizing on the “significant potential for further trade integration in Africa.”

In related news, a delegation from the Federation of Egyptian Industries (FEI) in Kigali met with over 150 Rwandan companies specialized in energy, construction materials, engineering industries, printing, leather, and clothes to discuss doing business with Egypt, Al Masry Al Youm reports.

Investment Minister Sahar Nasr and Housing Minister Mostafa Madbouly are in Saudi Arabia to discuss projects that could fall under the SAR 60 bn joint Egyptian-Saudi investment fund, unnamed sources tell Al Mal. The two ministers will also be talking about projects on offer in New Alamein.

Foreign Minister Sameh Shoukry heads to New Delhi today for the joint Egyptian-Indian committee and a meeting with Indian Prime Minister Narendra Modi, according to a ministry statement.

It’s Fed day: The US Federal Reserve’s Federal Open Market Committee will wrap its two-day meeting today. It’s the first FOMC meeting under new Fed boss Jerome Powell. Look for a quarter-point rate hike, analysts suggest. The Fed will unveil its interest rate decision at 2pm Eastern and Powell will speak at a press conference 30 minutes later. MarketWatch has a nice rundown of five things to watch for when the Fed speaks this afternoon.

It looks like the Donald might be hitting up the Saudis for some spare change: In his opening remarks at a press conference in Washington, DC, with Saudi Arabia’s Crown Prince Mohamed Bin Salman, US President Donald Trump immediately referenced an apparent Saudi pledge of investment worth as much as USD 400 bn. Bin Salman replied that the Saudis were considering it, according to a White House statement. Trump welcomed MbS as a friend of the US and “big purchaser” of American arms. He reportedly pushed bin Salman in private to resolve the regional standoff with Qatar, according to the Financial Times (paywall).

Alwaleed says there was no “settlement” in corruption crackdown, might split Kingdom Holdings in two: Kingdom Holding’s Alwaleed bin Talal said he was not arrested and did not reach a settlement agreement with Saudi authorities in Crown Prince Mohammed bin Salman’s corruption crackdown. “We signed something, yes, a confirmed understanding. Some others may call it a settlement. I don’t call it a settlement, because settlement to me is an acknowledgment you’ve done something wrong.” Bin Talal added that he’s working with advisers including Goldman Sachs to line up as much as USD 3 bn worth of investments for Kingdom Holding, adding that he’s likely to split the company’s USD 13 bn of assets through a spinoff of its domestic property and other holdings. Watch the full interview here (runtime: 1:03:05).

In miscellany this morning:

BlackRock’s bet on algorithms to beat human fund managers is the subject of the Financial Times’ Big Read, by former Middle East correspondent Robin Widdlesworth.

Blackstone co-founder Pete Peterson has died at age 91. The son of Greek immigrants, Peterson built Blackstone into the world’s largest private equity group. (Bloomberg | WSJ |FT)

The co-founder of WhatsApp has tweeted “It is time. #deletefacebook.”Facebook bought the now-encrypted messaging service for USD 19 bn back in 2014.

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