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Wednesday, 22 January 2020

What we’re tracking on 22 January 2020


Introducing Hardhat — your weekly briefing of all things infrastructure in Egypt: We’re proud to launch our second Enterprise industry vertical — Hardhat, which will focus each Wednesday on infrastructure. The scope of the Hardhat is massive, covering everything from energy, water, transportation, urban development and even social infrastructure such as health and education. From the glossy and shiny to the smelly pipes.

To put it all into perspective, Egypt needs USD 230 bn in infrastructure investment: To get an idea of why we started with infrastructure, you need only look to the World Bank, which says Egypt faces a USD 230 bn investment gap in infrastructure over the coming 20 years — and the vast majority of that is in transportation. Some USD 180 bn of the projected gap is in transport, while water infrastructure needs USD 45 bn in investment above current baseline projections.

Look for Hardhat every Wednesday: With support of our friends at Orascom Construction, we’ll bring you a weekly hand-picked selection of stories, analysis pieces, explainers, interviews, and reports that will help you be informed on infrastructure developments every Wednesday.

Stuff you can go to this week and next:

  • Renaissance Capital’s annual North Africa Investors Conference (pdf) kicks off in Marrakech today and wraps on Thursday.
  • This year’s Cairo International Book Fair runs today through to Tuesday, 4 February at the New Cairo International Exhibition and Convention Center.
  • AmCham will host US Ambassador Jonathan Cohen for its monthly luncheon on Tuesday, 28 January. Cohen will discuss prospects for commercial ties between Egypt and the US. Members can register for the event here.
  • CI Capital’s annual three-day MENA Investors Conference gets underway on Tuesday, 28 January at the Four Seasons Nile Plaza.
  • The British Embassy and IFC’s StartEgypt Forum 2020 will pit 45 startups against each other in a pitch competition on Wednesday, 29 January at the Greek Campus.


It’s day two of the World Economic Forum in Davos today, with the czars of global capitalism descending once again on the Swiss resort to talk, among other things, about the climate crisis and sustainable development. The irony of hundreds of pollutocrats flying private aviation to discuss ways to mitigate environmental destruction wasn’t lost on the forum this year: For the first time it will be providing special “green” jet fuel to participants, enabling them to reduce their Davos emission bill by 18%. Hey, it’s better than nothing.

Among those representing Egypt at this year’s summit: International Cooperation Minister Rania Al Mashat is attending as a co-chair of the WEF’s MENA arm and will participate in sessions on economic development, gender equality and technology. Oil Minister Tarek El Molla is also attending, announcing yesterday that the government had lowered its arrears bill to international oil companies to USD 200 mn.

Yesterday’s media coverage of Davos was dominated by what the press was building up to be a Trump vs Thunberg smackdown: President Trump denounced “prophets of doom” for their “predictions of apocalypse” in his summit address yesterday, a thinly-veiled attack on the 17 year-old Swedish climate activist who was sat in the audience. Thunberg then told the forum that its attendees had done “basically nothing” to limit carbon emissions, and that “our house is still on fire.”

There have been a deluge of climate-related reports released to coincide with the forum:

  • Thirty-three major banks have poured a total of USD 1.9 tn into the fossil fuel industry since the Paris Accords in 2015, 24 of which are represented at Davos currently, a Greenpeace report (pdf) points out.
  • Investment into climate finance stands at a comparatively-paltry USD 600 bn — less than a fifth of what is needed to decarbonize the world’s energy supply, according to a UBS report released on Monday, cited by the Financial Times. The investment bank says that quant funds will be among the casualties of climate change due to the inability of analysts to accurately predict climate smart investments.
  • The next financial crisis could be triggered by climate-related risks, according to Bank of International Settlements research, which warns that so-called “green swan” event could cause the global economy to face-plant.


All that talk of recession and inverted yield curves seems like a long time ago: Global equities finished 2019 up 27%, with all major asset classes seeing gains and risk assets performing strongly, in spite of slowing global growth, geopolitical volatility and the US-China trade spat, according to Deloitte. Stocks were propelled by the Federal Reserve’s triple rate-cut, easing by the European Central Bank and stimulus in key EM countries, as well as the US-China ‘phase one’ trade agreement reached at the end of the year.

But irrational exuberance may be in the air: Ned Davis Research’s metric measuring sentiment among traders shows that there is currently “excessive optimism” in the equity markets, suggesting that short-term risks may be rising, CNBC reports. The S&P 500 has already gained 3% since the start of the year despite weak earnings expectations and continued uncertainty in the US-China trading relationship. This is fuelling greater euphoria among traders, setting the markets up for a nasty fall should a disruptive event occur or the fundamentals weaken.


Lebanon finally has a government: Caretaker prime minister Hassan Diab has nominated 20 ministers to form a new cabinet, the New York Times reports. This is the first time in almost three months that Lebanon will have a functioning government after former prime minister Saad Hariri resigned in November amid large anti-government protests.

The new cabinet has a few things it needs to sort out: The country is in the midst of a severe financial crisis, with a plunging currency, a teetering banking sector and a borderline insolvent state.

On the bright side, Lebanon will probably avoid defaulting for at least two more months, Oxford Economics said yesterday. Lebanon is likely to restructure its debt later this year after paying its USD 1.2 bn Eurobond when it matures on 9 March, it said.

Saudi Arabia will issue its first Eurobond of the year today: The USD 5 bn issuance is made up of three tranches: a 7-year tranche offering 0.85%, a 12-year yielding 1.1% and a 35-year for 3.84%. The government plans to issue some USD 32 bn in bonds denominated in local and international currencies this year in a bid to narrow its budget deficit. Bloomberg has more.

Turkey is seeking more EU funding as its EUR 6 bn agreement with Brussels to stem the “flow of illegal migrants to Europe in exchange for financial aid and the promise of visa-free travel” comes to an end this year, the Financial Times reports.

More proof the world is kind of a mean place this morning:

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