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Tuesday, 10 September 2019

What we’re tracking on 10 September 2019

The news here at home is dominated this morning by the Euromoney Egypt conference, which took place yesterday. Among the noteworthy results from an audience poll at the one-day gathering:

  • A “clear, transparent and fair regulatory structure” was cited as the most important thing for the government to provide to encourage digitization in Egypt.
  • Two-thirds of attendees think the US-China trade war and overall global economic slowdown will only have a limited impact on the Egyptian economy.

External trade environment is “terribly bad” for Egypt -Citi Bank MD: Citi Bank Managing Director and head of Emerging Markets Economics David Lubin seemed to side with the 33% of audience members who see global conditions not boding well for Egypt, saying at the conference that the country is facing a “terribly bad” trade and external demand environment. Lubin also predicted that Egypt’s budget deficit will widen if we continue our reliance on cheap imports and fail to balance real liberalization and financial liberalization.

Egypt’s new sovereign wealth fund is expected to be operational in October, Finance Minister Mohamed Maait told Ahram Online at the conference yesterday. The Finance Ministry will transfer EGP 1 bn in capital to the fund in the coming days, 70% of which is due to be invested in governmental projects, Maait said. We have all the other highlights from the conference in this morning’s Speed Round, below.

The second day of EFG Hermes’ annual investor conference in London gets underway today at the Arsenal Emirates Stadium. The event provides a forum for investors, company executives, and fund managers from Egypt and other frontier and emerging markets to network and discuss investment options with London-based investors.

The Sahara agricultural expo is also on its second day today at the Egypt International Exhibition Center. The expo wraps on Thursday, 12 September.

Oil Minister Tarek El Molla is in the UAE for the World Energy Congress at the Abu Dhabi National Exhibition Center. The WEC is held every three years and brings together global energy sector leaders from governments, the private sector, academia, and media.

CBE Governor Tarek Amer is in the Rwandan capital Kigali today ahead of the start of the 2019 Alliance for Financial Inclusion Global Policy Forum, where he will assume the chairmanship of the AFI’s board of directors.

Egypt, Nigeria, and South Africa are the “three big economic engines of Africa,” Citigroup Managing Director Miguel Azevedo tells Bloomberg, in a piece that highlights rising enthusiasm about the future of Africa’s economy. Credit Suisse’s Vikas Seth believes Africa is where Asia was 20 years ago with a promising consumer market, a thirst for infrastructure investment, and a wealth of natural resources.

Is private equity worth the high costs? The net asset value of private equity funds has grown more than sevenfold since 2002 — roughly twice as fast as global public equities — according to data from McKinsey. At the same time, private equity fee structures drive costs that are higher and less transparent than those on public markets, raising questions about whether these costs are justifiable, Jonathan Ford writes in the Financial Times.

New research suggests that EM equities will be the place to be in the coming years: Emerging market companies will generate inflation-adjusted annual real returns of 5.2% over the next seven years, while the cheapest companies will return 9.8% each year, according to analysis by GMO Investments picked up by the FT. US stocks, meanwhile, will fare considerably worse, with large-cap stocks forecast to fall 3.7% each year over the same period.

This doesn’t mean everything is rosy in EMs: The IMF in July cut its 2019 GDP forecast for EMs to a decade low of 4.1%, down from 4.4% it had predicted in April.

Faleh’s ouster boosts crude prices: Crude oil prices bounced on the news that Saudi Prince Abdulaziz bin Salman was tapped to replace Khalid Al Faleh as the kingdom’s new energy minister, with Brent futures gaining 1.1% and US crude 1.3% in early afternoon trading, according to the FT. Salman also said at an Abu Dhabi conference yesterday that he does not intend to back away from oil cuts with Russia and other OPEC members, saying they will continue “for the long term,” reports the FT. With Saudi oil giant Aramco’s initial public offering on the horizon, there’s all the more reason for the country to push on with its policy of cuts as its highly ambitious USD 2 tn valuation target hinges on higher crude prices.

We now have a VIX for Trump’s tweet effects: JPMorgan analysts have created a volatility index to measure the effect of Trump’s tweets on US market yields, reports Reuters. Named “Volfefe” in reference to that “covfefe” tweet that still makes no sense two years later, the index samples recent tweets and measures their effect on the US interest rates market. The index could “easily” be adapted to equity and currency markets, the analysts said.

Antitrust investigation of Google underway in the US of A: The attorney generals of 50 American states are starting a “a wide-ranging review” of practices by tech giant Google they say could be a step back for competition, damage consumers, and hamper the “continued growth of the web,” according to the Washington Post.

This week’s ominous piece of research into the effects of automation and AI is brought to you by IBM,which through a fairly comprehensive study suggests that 120 mn workers in the world’s 12 largest economies may need to find new skills over the next three years as a result of technological change.

Attention, iSheep: Apple is expected to announce at an event getting underway at 7 pm CLT today three new iPhone models. You can watch the event live at the appointed hour. Bloomberg, TechRadar, and MacRumors have leaks and rumors of what to expect from the new models. Despite anticipation running highand mns expected to tune in for “the annual Silicon Valley ritual,” recent consumer and sales trends are suggesting that “Apple’s newest iPhones might not generate the buzz of years past,” says the Washington Post.

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