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Sunday, 13 May 2018

What we’re tracking on 13 May 2018

The Financial Regulatory Authority has handed down last week new regulations on the licensing of non-bank financial institutions. We’re still digesting the next, but the regulations outline requirements for market studies; rules on ownership structure of new entrants to the field; require regulatory approvals for stake sales; and force minority shareholders holding stakes of up to 5% to declare their status to FRA within two weeks of completing an acquisition.

Guilty until proven innocent? Also on Wednesday, the FRA announced that investors suspected of foul play in trades on the EGX Bourse will be suspended from any trading for the entire time they are under investigation, Al Shorouk reports, citing an official statement. The investigation period is capped at three months, the newspaper adds.

The House of Representatives begin debate of the Cyber Crimes Act in a plenay session today, Ahram Gate reports. The bill would grant the state the right to block websites and impose prison sentences of up to two years and fines of EGP 100k-300k on anyone who creates, manages or uses a website or an online account aiming to commit or facilitate a crime. The bill was introduced to the House in February, expanding the definition of online crime to include “spreading false news about Egypt.” News organizations are particularly concerned about the proposed law.

Arqaam Capital says it is heavily overweight on Egypt as earnings season comes to a close. Arqaam Capital’s weight on Egypt is 20%, higher than the benchmark relative strength index of 4%, Arqaam managing director and head of research Jaap Meijer tells Bloomberg TV. Arqaam is bullish on consumer and industrial companies, he added.

BoA thinks oil prices could hit USD 100 next year: Oil prices could go as high as USD 100 per bbl in 2019, Bank of America said Thursday, becoming the first major Wall Street bank to call oil at that price, according to Bloomberg. BoA thinks Brent crude, which was trading at USD 77/bbl on Thursday, will reach USD 90 by 2Q2019. “Looking into the next 18 months, we expect global oil supply and demand balances to tighten,” Francisco Blanch, head of commodities research at Bank of America Merrill Lynch in New York, said in a report. The report sees US sanctions on Iran as being a main contributor to the spike, while also noting supply issues with Venezuela.

That could be challenging for Egypt’s fiscal reform drive as the FY2018-19 budget assumes oil prices will average USD 67.20 per bbl. The Finance Ministry’s report on the budget names high oil prices as the biggest risk impacting next year’s targets.

The selloff of emerging markets assets is nothing more than a “storm in a teacup,” asset manager Pictet said in a note carried by the FT. “We expect that at some point this sell-off will offer compelling opportunities for investors who have the patience to ride out the storm,” they add.

JPMorgan picked up a similar tune, arguing in a separate note that “EM fundamentals, improved valuations following the market weakness, and expectations of a developed market growth rebound in the second quarter keep us hopeful that the sharp EM correction seen in the past month will prove to be an opportunity to add rather than the beginning of a protracted unwind.”

FOR THE RECORD- A clarification is in order on coverage suggesting that Naguib Sawiris has invested half of his net worth in gold. Sawiris has invested 50% of his net worth in shares of gold mining companies, but not in the commodity itself, as has clarified in a tweet. H/t RK

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