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Wednesday, 4 April 2018

What we’re tracking on 4 April 2018

US stocks stabilized yesterday after a day of heavy selling on Monday led by a slump in tech stocks that had also hit Europe and Asia. Nasdaq was 1% higher at market closing time yesterday, “while the broader S&P 500 ended up 1.3%,” which is just above its 200-day moving average, says the Financial Times. “The downwards pressure had lingered in Europe earlier in the day, where the Stoxx index tracking the tech sector closed down by 0.8%, although that was off its widest losses for the session. Its declines remained broad, with only four of its 27 constituents making gains.” Analysts expect fear of an imminent trade war between the US and China to continue affecting global market activity.

Asian markets are mixed this morning. Shares in Japan, Korea and Hong Kong are largely in the red, while Shanghai and Shenzhen are in positive territory.

That trade war? Chances are, it just got real: The Trump administration last night imposed “25 percent tariffs on some 1,300 industrial technology, transport and medical products to try to force changes in Beijing’s intellectual property practices,” Reuters reports. The list includes USD 50 bn-worth of imports “and represents the most aggressive US trade response to China’s actions since President Richard Nixon normalized diplomatic relations in the 1970s,” the Financial Times says.

The roadshow for Egypt’s upcoming eurobond issuance kicks-off today. The government has hired Banca IMI, BNP Paribas, Deutsche Bank and Standard Chartered Bank to act as joint bookrunners for the EUR 1-1.5 bn issuance that is reportedly set to take place in three-weeks’ time on the Luxembourg stock exchange. “Subject to market conditions, the country will proceed with the planned debt sale after the meetings, offering notes with maturities of eight and/or 12 years,” according to a document acquired by Reuters. Sources had said last week that the eurobonds would have tenures of seven, 12, 15, and 30 years, and that officials would make a final decision on whether to take the offering north of EUR 2 bn based on feedback from investor meetings. Zaki Hashem & Partners and Linklater are legal advisors to the investment banks, while Al Tamimi & Co. and Dechert were chosen as legal advisors to the government for the transaction, which will be Egypt’s first-ever EUR-denominated bond sale. The government concluded a USD 4 bn eurobond sale in February.

An IMF delegation is in town to review Egypt’s tax laws and follow up on efforts to reform them, Finance Minister Amr El Garhy said yesterday, Al Shorouk reports. The House of Representatives is expected to discuss amendments to the Income Tax Code that would push the deadline for submitting supplementary documentation to tax returns in a plenary session this month, once it reconvenes after Easter break. El Garhy hinted that more amendments to the rules and administration of taxes are on their way.

With the EGX having outperformed regional stock markets this year, there’s an expectation that the rally is set to continue following the elections. The crux of the issue is whether the government will continue with the reform agenda. Naeem Holding Director of Research Allen Sandeep believes that the government will press forth with the reform agenda and so too shall the Egypt rally. He also tells Bloomberg TV that continuing with the reform agenda will help keep FX reserves at an upward trajectory, even if that is at a slower pace (watch, runtime: 3:17).

Did Saudi just recognize Israel? Israelis “have the right to have their own land” alongside the Palestinians, Saudi Crown Prince Mohammed bin Salman said in an interview with the Atlantic. When asked if Iran was pushing Israel and Saudi closer together, he said: “Of course there are a lot of interests we share with Israel and if there is peace, there would be a lot of interest between Israel and the Gulf Cooperation Council countries and countries like Egypt and Jordan.” The statement marks the first public acknowledgement of the existence of Israel by a Saudi official ever. It may be one of the few statements by regional to publically attest to an inherent right for Israel to exist and not just a reality, said former US peace negotiator Dennis Ross. MbS’ statement comes as he is on a grand schmoozing tour of the US to encourage investors and improve Saudi’s image abroad.

The EGX will close on Sunday and Monday next week for a four-day weekend in observance of Easter and Sham El Nessim. Expect banks to be closed, too. We hope you’re looking forward to a four-day weekend as much as we are. Enterprise will be off next Sunday and Monday in observance of the holidays.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

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