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Thursday, 26 September 2019

What we’re tracking on 26 September 2019

You may now take a breath: The sell-off on the EGX30 finally cooled off yesterday as the index closed up 3.2%, breaking an eight-session losing streak. We’re going to go out on a limb and say it is likely to be an uneventful day today as investors hold their breath ahead of the central bank’s interest rate decision and wait to see whether there are protests again this weekend.

And for all of the hand-wringing this week, it’s particularly nice to end with a run of decent business news: Global insurance giant Prudential is investing in a Sarwa Capital subsidiary, e-commerce startup MaxAB just raised a massive USD 6.2 bn seed round, and France’s Valeo is going to open two customer service centers in Egypt. We have chapter and verse on all three developments in this morning’s Speed Round, below.

That’s right, folks: It’s interest rate day. The Central Bank of Egypt’s Monetary Policy Committee will meet today to review key interest rates. The market’s reaction to last weekend’s protests “coupled with greater political risk across the Middle East, mean a more moderate cut, or even a hold, may now also be on the table,” Bloomberg forecasts.

Who’s expecting what? Eight of the nine economists we surveyed expect a rate cut of 50-150 bps, while all respondents to Reuters’ interest rate poll also expect a cut. Our friend the economist Reham El Desoki told Bloomberg she expects a 50-100 bps cut, but isn’t ruling out a “more conservative” decision to keep rates on hold for now and accelerate monetary easing next year. Expectations of a cut come on the back of unexpectedly low inflation figures in August. Prime Securities’ Mona Bedair also said in a research note picked up by Masrawy yesterday she expects a 50-100 bps cut when the MPC meets today.

Middle East eurobond issuances are ramping up as interest rates come down: Corporate and sovereign eurobond issuances in the Middle East and North Africa are hitting the market “at a record pace as global monetary easing prompts them to exploit the lowest funding costs they’ve ever experienced,” according to Bloomberg. The region has seen around USD 85 bn-worth of eurobond sales this year, with Saudi Aramco and Qatar leading the pack with the largest issuances. Saudi Arabia could also bring a new issuance to market this year, while the Egyptian government is expected to move ahead with a USD 2.5-3 bn eurobond issuance at the end of 2019 or early 2020.

Conferences taking place in the coming days:

  • The launch of the Mediterranean Business Angels Network will take place at the three-day Techne Summit 2019, which starts on Saturday, 28 September at Alexandria’s Bibliotheca Alexandrina.
  • Beltone Financial Holding will hold its Beltone Access conference in Dubai next week.

Aramco could list in November: Saudi Aramco could kick off its IPO process around 20 October ahead of a potential listing on the Tadawul in November, sources told Bloomberg. The company hopes to achieve a minimum USD 2 tn valuation, and began meetings with analysts yesterday. This contradicts the claims of two sources who said on Tuesday that the IPO is unlikely to take place this year due to the recent attacks on the company’s facilities. Aramco is currently battling to get the Abqaiq and Khurais refineries back online, a process which sources said earlier this week could take months.

The stake on offer could also be doubled: Sources separately told the Wall Street Journal that the Saudi Royal Court is considering upping the stake to as much as 10%, instead of the 5% stake that the company was expected to offer. Should Aramco get its target valuation, the listing would raise USD 200 bn, eight times more than the USD 25 bn brought in by Alibaba, currently the biggest IPO in history.

CEO scalps are hanging on boardroom walls: It’s been a really horrible week in which to be a high-profile CEO in the US of A, with Adam Neumann having been forced out as CEO of WeWork, EBay chief Devin Wenig stepping down after conflicts with his new board, and Juul Labs tossing out its CEO and replacing him with a veteran executive of Big Tobacco.

A readout of a phone call confirms The Donald asked Ukraine’s president to investigate American presidential candidate Joe Biden, adding fuel to impeachment proceedings.

Bibi has 28 days to try to form a new government and could request a two-week extension if necessary, Reuters reports. Netanyahu.

Among the handful of things making us go “Hmm…” heading into the weekend:

  • Facebook has gobbled up a company that mind-controlled tech: Our social media — and soon-to-be financial — overlords have agreed to purchase CTRL-Labs, a tech startup developing software that can be controlled by thought alone, Bloomberg says.
  • Pre-food at McDonalds: Like Minority Report, but with burgers. The US fast food giant is harnessing big data to predict what each customer wants to eat before they even order. This short Bloomberg video has more (watch, runtime: 1:30).
  • The struggle over the gig economy continues: Drivers working for ride-hailing companies such as Uber and Lyft are divided over new legislation signed in California last week that reclassifies them as employees, the Wall Street Journal reports.
  • Our greener future is in … natural gas? An opinion piece in the Wall Street Journal argues that existing solar and wind initiatives are not enough to drive the kind of economic change necessary to raise the standard of living in African countries.

** A quick programming note: My Morning Routine, our popular Thursday section, is on hiatus this week and will be back next Thursday.

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