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Monday, 13 May 2019

What we’re tracking on 13 May 2019

Week one of Ramadan is now over, ladies and gentlemen.

Look for amendments to the mineral resources act to go to the House of Representatives today. We have the full rundown in this morning’s Speed Round, below.

Did the unexpected cooling-off of inflation in April give the central bank room to cut interest rates when it meets a week from Thursday? That’s what Beltone’s Alia Mamdouh suggests in a report (pdf) out yesterday. “Favorable global conditions, with the ease in monetary tightening, will continue to provide the buffer for the CBE to resume its monetary easing [in May]. Meanwhile, the most likely scenario for us will remain a 100 bps cut in rates by the end of the year, accounting for the expected inflationary repercussions of the wider implementation of the fuel indexation mechanism.”

Market watchers are paying close attention to the opening bell in Europe and the US of A today as traders try to get their heads around what’s in store for global equities after recent events including the sudden heating up of the US-China trade war. Asian shares are edging lowerthis morning and futures suggest the S&P will open 200 points lower in New York this afternoon.

The result? Early signs this morning that traders are scrambling for safe havens.

All of this is bad news for emerging markets… “The standoff between the U.S. and China is back at the top of emerging-market investor concerns as they assess how far they should price in a full-blown trade war,” Bloomberg suggests

…but good news for our future robot overlords: There are concerns that “computer driven funds [that] amassed big equity positions while markets were sleepy” could suddenly be “scrambling to sell their stocks and move into safer assets like treasuries” now that market volatility appears to be back on the menu, the Wall Street Journal warns.

You know who’s looking particularly prescient right now? Deutsche Bank, which warned at the end of 2018 that an algorithm-driven fire sale in equities and credit would be the biggest risk to global markets this year.

How bad could it get? JPMorgan has previously suggested that there are some USD 7.4 tn in stocks that would be “subject to forced selling by passive funds during the next downturn.”

In our diary for the rest of the week:

  • The Egyptian Private Equity Association is having its annual sohour tomorrow. Public Enterprise Minister Hisham Tawfik is the special guest. If we didn’t work during the appointed hour, we would be in attendance.
  • Expect 1Q earnings to keep rolling in over the next few days. We have a spate of earnings releases in this morning’s Speed Round.

Tales of our friends and Allies #1: Pakistan has reached a staff-level agreement with the IMF for a three-year, USD 6 bn facility, the IMF announced yesterday. The agreement remains subject to approval from the IMF’s Executive Board. Islamabad, which is no novice when it comes to IMF financing, has been in talks for a bailout package for nearly a year. Since the 1980s, the IMF has provided Pakistan with a total of 12 packages, the most recent of which was a USD 5.3 bn backstop in 2013.

Tales of our Friends and Allies #2- Wait, they haven’t Brexited yet? UK Prime Minister Theresa May is apparently under pressure to step down. (FT)

Tales of our Friends and Allies #3- Wait, he hasn’t formed a government yet? Israeli Prime Minister Benjamin Netanyahu is going to ask for more time to form a government. (Reuters)

In miscellany this morning:

  • Mo Salah will share the Golden Boot award as the Premier League’s top scorer with fellow Liverpool player Sadio Mane and Arsenal’s Pierre-Emerick Aubameyang, as each of the African players put away 22 goals this season, according to Reuters.
  • Salah’s Liverpool lost its campaign for top place in the Premier League yesterday despite a 2-1 victory over Wolverhampton as Manchester City edged Brighton 4-1, the BBC reports.
  • The UK arm of Abraaj founder Arif Naqvi’s Aman Foundation is facing closure as UK regulators increase pressure in the wake of the private equity fund’s collapse, the National reports.

Image presented without comment or context:

(Photo via the Economist’s Instagram feed. Those of you who know us may now commence with the Batreek jokes…)

What we’re tracking today, the Ramadan Edition:

MUST READ- How old are successful tech entrepreneurs?In their 40s, argues “a definitive new study” from Northwestern’s Kellogg School of Management. The paper found that “among the very fastest-growing new tech companies, the average founder was 45 at the time of founding. Furthermore, a given 50-year-old entrepreneur is nearly twice as likely to have a runaway success as a 30-year-old.”

What’s more, successful entrepreneurs tend to have experience in the industry in which they build their startup: “founders with three or more years of experience in the same industry as their startup are twice as likely to have a one-in-1,000 fastest-growing company.”

A pre-iftar reading list to kill time between your post-workout shower and the breaking of the fast:

  • The best way to make a decision in tough times: Take the “newspaper test,” Warren Buffett suggests. Imagine how you would feel about “about any given action if [you] know it was to be written up the next day” in the press by “‘a smart but pretty unfriendly reporter’ and read by their family, friends and neighbors.” (CNBC)
  • New addition to our TBR pile: Origins: How Earth's History Shaped Human History will make its debut tomorrow, arguing that “there is a clear causal chain taking us from the politics and socio-economic conditions of today, to their roots in historical agricultural systems, and then further back to the geological tapestry of the ground beneath our feet.” The WSJ has a review that appealed to our inner science and history nerd.

Still have five minutes to spare? Go read how Pamela Anderson (yes, the Baywatch Pamela Anderson) landed an interview with the Financial Times.

Also: We (Enterprise. Egyptians. Humans.) are not the only ones who occasionally make a typo. Witness Australia’s new AUD 50 note, which drops the “i” from “responsibility” in the microprint (below). The NYT has the back story and you can just tap here for a larger view.

RAMADAN PSA- Bank hours are at 9am-2pm for employees; doors are open from 9:30am until 1:30pm for customers. The trading day at the EGX runs 10:00am until 1:30pm.

So, when do we eat? Maghrib is at 6:40 pm CLT today in Cairo. You’ll have until 3:24 am tomorrow morning to caffeinate / finish your sohour.

WANT TO HAVE IFTAR WITH US? Take our very short survey, in which we ask you which sector you would most like to see us explore in a dedicated weekly vertical. You can choose from the seven sectors we have included or name a sector yourself. We would also like to know what it is you enjoy and like about Enterprise and what it is you don’t. The survey will run all week.

We’ll be drawing the names of at least 10 survey takers and inviting them to join us for iftar on Wednesday, 29 May at the Four Seasons Cairo at the First Residence. Think of it as a chance to get to know some of you and discuss the survey questions, your views on Enterprise, the economy, life and the universe, so please mark the date. We’ll announce the winners on Tuesday, 21 May.

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