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Monday, 26 November 2018

What we’re tracking on 26 November 2018

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Yesterday was ugly for Egyptian equities, but Asian markets are reasonably quiet as the global trading week gets underway. The EGX30 closed down 3.8% yesterday, its worst performance since February 2016 as index heavyweight CIB sagged 6.5% in the wake of news that banks could be paying significantly more income tax if a Cabinet-backed change of accounting rules on the treatment of income from investment in government debt is made law. Only the National Bank of Kuwait and QNB Alahli bucked the trend after analysts singled them out as having the lowest exposure to Egyptian treasuries. We have the latest on the tax changes in this morning’s Speed Round (below).

Asian shares opened mixed this morning, US equity futures rose slightly after shares were battered at the close of last week and oil gained after its plunge on Friday.

Is Saudi Crown Prince Mohammed bin Salman in town? The Saudi royal was reportedly due to meet with President Abdel Fattah El Sisi in Cairo yesterday, Rep. Mostafa Bakry had claimed on Saturday, but MbS spent his day in Abu Dhabi, where he met with UAE Vice President and Abu Dhabi ruler Sheikh Mohammed bin Rashid, according to the National, before making a pit stop in Bahrain. Our take is he arrived in Cairo overnight and is set to meet with El Sisi today. MbS arrives in Egypt as some Republican lawmakers in the United States seems poised to call on President Donald Trump to take action against Saudi Arabia for the killing of columnist Jamal Khashoggi in Istanbul last month, the WSJ reports. If you read last week’s extraordinary, eight-exclamation-mark statement from Trump on KSA, you know The Donald isn’t in the mood to comply.

The Financial Regulatory Authority (FRA) is scheduled to hold a hearing today on Beltone’s appeal of a six-month suspension handed to its investment banking arm. The timeout was ordered amid reports some investors had complained of irregularities in the IPO of structured- and consumer-finance player Sarwa Capital.

On the House of Representatives’ calendar this week:

  • The House Industry Committee will discuss this week Egypt’s agreement with the EU to cut to 0% import duties on EU-assembled cars as of 1 January 2019;
  • The House Economic Committee is scheduled to discuss today legislation that would allow the prime minister send to an Investment Ministry dispute resolution committee any case that has arisen from court rulings to reverse privatization sales;
  • Amendments to the Real Estate Registry Act will be introduced in the House this week.

Mining conference opens today: The Arab International Conference for Mineral Resources runs today through Wednesday. You can catch the agenda here (pdf).

The Cairo ICT expo continues today and ends Wednesday at the Egypt International Exhibition Center. More than 500 companies from 16 countries are set to participate.

UK Prime Minister Theresa May and EU leaders approved on Sunday a 585-page withdrawal treaty setting out the terms of the UK’s exit from the bloc. May will now embark on a two-week campaign to sell Britain on the Brexit pact, which is short on specifics. By March, the UK will enter a standstill transition period until December 2020. During that time, EU rules will continue to apply as the two sides hammer out trade and security aspects of the divorce.

Note for the hometown crowd: The UK is the leading non-Arab investor in Egypt and is reportedly in early talks with Egypt on a post-Brexit trade agreement. Read more about Brexit’s latest development in the Wall Street Journal or the Financial Times.

Are “challenger banks” having their moment? And would that question annoy us less if they were called something else? (And no, “neo-banks” won’t do the trick.). Upstarts looking to eat a piece of the US banking industry’s pie have gotten 4x as much funding from venture capitalists this year than they did last year — and 10x more than in 2015, according to data from CB Insights. The sector is also earning attention from the likes of Goldman Sachs and payments outfit Square, the New York Times reports. Shockingly, the Times adds, “that doesn’t mean that building a profitable business will be easy.” Great business journalism it isn’t, but the pittance in deposits US banks could lose next year to the upstarts (some USD 159 bn, the Times says) may just the beginning as “everyone is looking at cards and bank accounts as the next battleground.”

In miscellany this morning:

SHOCKER OF THE DAY: “Jihadists and right-wing extremists use remarkably similar social media strategies.” From the Department of the Obvious, courtesy of the Gray Lady’s editorial board.

An Egyptian-born CIA officer may have been the key to an alleged coup attempt in Montenegro, the New York Times reports in the latest installment of its reporting on the very interesting life of Joseph Assad.

The WSJ tells you how to talk to your teenager: “When parents were accessible and calm, gave good advice and offered reciprocal disclosures about their own lives, teens reported being more apt to talk.” Read more in The right way for parents to question their teenagers.

FOOD FOR THOUGHT: A ‘three-stage life’ poses challenges to us all, writes Simon Kuper for the Financial Times, saying that the “generational clash in western societies may be sharper than the economic and racial divides with which it overlaps.”

The Financial Times’ list of 2018’s best books is now out, with categories including (but not limited to):

Or you can just head to the landing page for the package here for a rundown on then many categories included, from art to history and politics. Notably, former NYT Cairo bureau chief David Kirkpatrick’s Into the Hands of the Soldiersmade the list.

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