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Thursday, 13 September 2018

Higher yields on government bonds could be a plus, says RenCap’s Ahmed Badr

**#2 Higher yields on government bonds could be a plus, says RenCap’s Ahmed Badr: The higher demanded at government bond auctions could be read as a positive, our friend Renaissance Capital MENA CEO Ahmed Badr told Bloomberg TV in an interview on Tuesday. Allaying fears from the Finance Ministry, which cancelled two bond auctions over the past month on “unreasonably” higher than expected yields, Badr points out that if yields remain high this would bring portfolio investors back.

Will core inflation rising impact the CBE’s decision later in the month? Badr gives a strong call that it would not, with the central bank expected to maintain interest rates. Higher inflation was expected considering the impact of a strengthening USD on a net importing country and the subsidy cuts. It is actually advantageous for the CBE to keep interest rates marginally higher.

As for trade calls, Renaissance Capital likes infrastructure plays on the back of the interest given to it by the government, with companies such as Orascom Construction being undervalued. Badr also likes Qalaa Holdings for the expected turnaround in its finances that will take place when Egyptian Refining Company goes live. Bloomberg has posted only part of the interview, which you can catch here (watch, runtime: 3:02).

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