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Thursday, 9 August 2018

What we’re tracking on 9 August 2018

Do you need the weekend as much as we do? Odd that we feel that way on such a quiet news day, but it is what it is…

What little Egypt news is out there is interesting:

  • The nation has edged even closer to a natural gas import agreement with Israel (a key to our bid to become the region’s premier energy hub);
  • Private sector investment bankers and lawyers aren’t being crowded out of the privatization program, Finance Minister Mohamed Maait assures us;
  • And mining industry regulator EMRA has accepted Aton Resources’ declaration of commerciality, potentially giving Egypt its second major gold producer after Centamin.

Iran sanctions hitting us at home? The US re-imposing sanctions on Iran will negatively impact state-owned Misr Iran Development Bank’s (MIDB) foreign transactions and shareholder’s activities, MD Amr Tantawi claims, Al Mal reports. The US will reinstate on 5 November sanctions targeting transactions by foreign financial institutions with the Central Bank of Iran, according to a White House Statement. The US re-imposed on Monday sanctions on the Iranian rial.

The big news out of the region, though, remains the tiff between Saudi Arabia and Canada, where the Financial Times broke the news yesterday that Riyadh has “instructed [its] overseas asset managers to dispose of [its] Canadian equities, bonds and cash holdings ‘no matter the cost.’” Bloomberg does a good job of tracking down what those holdings may be, and the Wall Street Journal underscores how limited investment ties are between… the two erstwhile allies by saying the selloff is worth “hundreds of mns.” Canada’s Globe and Mail, though, quotes the Royal Bank of Canada as estimating Saudi’s central bank holds about USD 10 bn in Canadian stocks, bonds and other instruments, or less than 1% of foreign holdings of Canadian securities.

So as of now, KSA has:

  • Recalled its envoy to Ottawa and PNG’ed the Canadian ambassador to Riyadh;
  • Promised to pull more than 10k scholarship students out of Canada and to recall some 800 physicians doing internships, residencies and fellowships in the Great White North;
  • Frozen new trade and investment, including informing brokers it will buy no Canadian wheat or other commodities;
  • Suspended flights to Canada from Saudi;
  • Made clear there will be no mediation until there’s an apology of some form.

Business is taking stock: Some big Canadian businesses say they’re unfazed, and Canada’s most influential newspaper (generally a mild-mannered outlet) is running with an editorial declaring that “Justin Trudeau shouldn’t go grovelling to Saudi Arabia.” Omar Allam, a diplomat turned consultant to companies doing business in the GCC, makes the case for why Canadian businesses should care about KSA — and offers three ideas on how to prevent the dispute from turning into “a visa standoff and full-blown trade war.”

Don’t expect it to end anytime soon: KSA Foreign Minister Adel Al-Jubeir has declared that there’s nothing to mediate until Canada apologizes for interfering in Saudi affairs. Canadian Prime Minister Justin Trudeau made it clear yesterday that he’s not backing down. (That said, Trudeau offered something of an olive branch, telling reporters yesterday that Saudi “is a country that has great significance in the world, that is making progress in the area of human rights.”)

All of this over a couple of tweets? There’s a missing link here — and nothing has leaked out of Riyadh yet that would make it clear.

Need funding for, say, an infrastructure project with commercial and developmental cred? Meet “OPIC on steroids.” America is looking to get back into the development finance institution (DFI) game, ratcheting-up its approach to “commercial diplomacy” by taking over “the current US government development finance institution, the Overseas Private Investment Corporation (Opic), as well as several USAID credit facilities and the agency that provides financing for feasibility studies in emerging markets,” the Financial Times notes in an op-ed carried by its Beyond Brics blog. OPIC has previously backed or proposed backing Qalaa Holdings (back in 2011), oil and gas player Apache, CIB, Carbon Holdings’ Tahrir Petrochemicals Corporation and microfinance players, among others.

Other international news worth a skim this morning, time permitting:

  • The FT’s John Authers argues there is “value in emerging markets after an unwelcomed decoupling” as EM shares look well-priced relative to US equities.
  • China is looking to slap additional tariffs of as much as 25% on some USD 16 bn worth of imports from the United States including fuel, steel, automobiles and medical equipment, Reuters reports.
  • The US securities regulator is probing whether Elon Musk was telling the truth or trolling critics with his suggestion he could take Tesla private at USD 420 a share, according to the Wall Street Journal. The offer, if made real, would be a 20% premium to Tesla’s share price at the time of the tweet. 4/20 is also shorthand for 20 April, an international day for cannabis-related protests and events, as the dweebs of Tweeter pointed out.

PSA- Chinese gov’t recalls rabies vaccines in China and abroad, including Egypt: Chinese authorities have issued a recall for defective rabies vaccines produced by Changchun Changsheng Bio-tech Company after a an investigation found the company guilty of violating regulatory standards since 2014, according to the State Council’s website. Overseas sales made up 2.3% of Changsheng’s revenue in 2017, with its vaccines being sold in Egypt, India, Cambodia, and Belarus, according to financial records obtained by Bloomberg.

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