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Sunday, 20 January 2019

What we’re tracking on 20 January 2019

It looks like we’re going to have a short work week: Thursday will be a day off for the public sector in observance of Revolution Day / Police Day, which falls on Friday, according to a Cabinet statement on Thursday. This makes it likely financial markets will follow suit, but there was no word from the central bank or the stock exchange at dispatch time this morning.

There can be no better way to start (what could be) a short work week than with good news on the FDI front: Mercedes-Benz is announcing it could resume production in Egypt, and we got welcome news on the investment front from both the EBRD and the OECD. We have chapter and verse in this morning’s Speed Round, below.

France’s Minister of the Economy and Finance, Bruno Le Maire, is in Cairo today to meet with President Abdel Fattah El Sisi ahead of French President Emmanuel Macron’s visit to the capital at the end of the month, according to the French Embassy in Cairo. La Maire is also scheduled to discuss economic cooperation with Prime Minister Moustafa Madbouly and members of the Cabinet’s economic group. We have more on Macron’s expected visit in this morning’s Egypt in the News section, below.

Guess who’s not coming to town? As the bickering on Capitol Hill rumbles on, US President Donald Trump has canceled House Speaker Nancy Pelosi’s planned tour of Egypt, Afghanistan and Belgium, citing the continued government shutdown, Reuters reports. In response, the top House Democrat accused Trump of endangering the lives of US troops stationed in Afghanistan by making her visit public. Popcorn, anyone?

(Speaking of the shutdown: 1) it is starting to hit US growth, the head of the NY Fed warns and 2) The Donald may be offering an olive branch of a form, saying he will extend some protection against deportation to undocumented immigrants if he gets a few bn in funding for his border wall.)

Foreign Minister Sameh Shoukry is attending an Arab economic summit that kicks off in Beirut today against the usual backdrop of regional bickering. The emir of Qatar will also be attending the Arab Economic and Social Development Summit, Reuters reports. Several Arab leaders have said they will not be participating.

Our friends at AmCham will be hosting today ICT Minister Amr Talaat at their monthly luncheon. You can register for the event here.

A two-day conference on reforming religious discourse in Egypt kicked off yesterday, Ahram Online reports.

The best thing we’ve read about what has really led to two months of protest in Sudan: Sudan must reform or seek a bailout to pull its economy out of a nosedive, writes Patrick Werr at Reuters, suggesting that in our southern neighbor, as elsewhere, it’s the economy, stupid: “The government has run up enormous budget deficits by subsidising the cost of fuel, bread and other products. To cover this deficit, it has expanded the money supply. But that has served to debase the currency, causing inflation to soar and the value of the Sudanese pound against other currencies to plummet — in turn pushing up the cost of subsidies and widening the deficit even further.”

In other Sudan news, the country is set to receive USD 300 mn and 1.12 mn tonnes of fuel courtesy from the UAE, as continued protests take their toll on the country’s economy, according toBloomberg.

Emerging market stocks were up Thursday after news that the US may begin lifting tariffs on imports from China. The bounce came despite the US Treasury later denying the reports, Reuters and Bloomberg note. The short-term boost to EM equities did nothing to stop a slide in developing currencies against a strengthening USD.

Less upbeat on EM: The FT warns against the pileup of foreign currency debt in emerging markets, saying higher funding costs and a slowdown in global growth may make debt service challenging, making “the pace of accumulation” concerning, says Emre Tiftik, an economist with the Institute of International Finance. This could make it difficult for some markets to invest in productive sectors, and yet more borrowing is on the horizon.

Hedgies, beware: The industry contracted last year for the first time since the financial crisis, although the decline of assets under management was significantly less in 2018 than 2008 (USD 100 bn compared to USD 461 bn), the Financial Times reports. Although the industry has boomed over the past 30 years, 4Q2018 saw outflows of USD 22.5 bn, which a leading data provider attributes to “several factors, most notably investor reaction to steep losses in traditional asset investments and the sharp spike in equity market volatility leading to redemptions.”

PSA- It’s a foggy morning across the country, from the northern coast to the northern tip of Upper Egypt, the meteorological authority said yesterday. Expect daytime highs of 18-19°C and overnight lows of 7-8°C in Cairo and Alexandria.

That 30+°C weather you were warned last week to expect? Not happening this week, according to our favorite weather app.

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