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Monday, 27 January 2020

What we’re tracking on 27 January 2020

Will we know the fate of the capital gains tax this week? A committee made up of the Egyptian Tax Authority, the Finance Ministry, and the Egyptian Capital Market Association will meet this week to discuss tax on stock market transactions, sources told the local press. The Finance Ministry is close to finalizing draft amendments that will settle whether capital gains tax will indeed be making a comeback. The fate of the 10% capital gains tax, which was shelved for three years in 2017 in favor of a provisional stamp tax, is still unclear. You can get a refresher on the proposals for its reintroduction here.

The final round of GERD talks get underway in Washington tomorrow. Egyptian, Ethiopian and Sudanese officials will gather in the US capital to hammer out a final agreement following last week’s technical meetings in Khartoum, which the Sudanese Irrigation Minister has said produced a draft agreement with some “convergence” between the three sides.

Gov’t to announce winner of Sixth of October dry port tender next week? A source in the Transport Ministry told the local press yesterday that the ministry will hold a meeting at the beginning of February to announce the winning coalition in the tender to construct and operate the Sixth of October dry port. Two consortia are competing for the tender: one comprising India’s Concord, Malaysia’s PSA, and Hassan Allam, and another made up of Schenker Egypt, 3A International, and Elsewedy Electric.

Egypt’s Fawaterk is among ten startups to have been selected for the third edition of the Startupbootcamp FinTech Dubai accelerator, which provides support from a global network of entrepreneurs, investors and industry corporations, as well as USD 17k in funding, Disrupt Africa reports. The Dubai accelerator has the backing of several large financial institutions and will conclude with a demo day in April. Fawaterk, an online invoicing and payments service, is a graduate of Pharos’ Pride Capital / Startupbootcamp’s Fintech Cairo accelerator program.

Stuff you can go to this week:

  • AmCham will host US Ambassador Jonathan Cohen for its monthly luncheon tomorrow. 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 tomorrow 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.
  • This year’s Cairo International Book Fair runs through to Tuesday, 4 February at the New Cairo International Exhibition and Convention Center.

News triggers to keep your eye on with the new month approaching:

  • The purchasing managers’ index for Egypt, Saudi Arabia and the UAE is due out on Tuesday, 4 February at 6:15am CLT.
  • Foreign reserves figures for January will be released on Tuesday, 4 February.
  • Inflation figures for January are out Monday, 10 February.

EGP WATCH- The EGP resumed its surge against the greenback yesterday, reaching new 35-month highs of EGP 15.71/USD. The currency has now gained 29 piasters since it began appreciating on 8 January when it was trading at exactly EGP 16.00/USD.

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Coronavirus fears snuff out EM rally: The seven-week rally in emerging-market equities, bonds and currencies came to an end last week as concerns grew among investors that the coronavirus outbreak in China may develop into a SARS-esque pandemic, Bloomberg says. The MSCI EM equities and currency indices both fell back during last week, while the JPMorgan EM bonds ETF also lost ground. “The Wuhan coronavirus outbreak has the potential to whipsaw Chinese equities and, indeed, all global risk assets,” said Seema Shah, chief strategist at Principal Global Investors. “With valuations elevated, asset classes are already vulnerable to shifts in sentiment, and memories of the meaningful economic impact of SARS has the potential to play havoc with market confidence.”

Middle East equities caught in the crossfire: Stock markets in the Middle East fell at the start of the trading week as worries grew about the spread of the virus, with Saudi taking the biggest hit among GCC countries, closing down 0.7%.

Meanwhile, in China…: The Chinese government has banned all wildlife trade nationwide and all outgoing overseas group tours in a bid to curb the spread of the coronavirus, which has so far left 56 dead, according to Reuters. Yet, Chinese officials are urging people to calm down, according to the Wall Street Journal. Over five million people have already fled Wuhan, the province where the deadly virus was traced to, particularly a seafood market that was illegally selling wildlife. Egypt’s Health Ministry distributed guidelines on handling the virus on Saturday to prevent it from spreading in the country, according to Al Masry Al Youm.

enterpriseFrom 30 January to 6 February, Miss Germany returns to Somabay for the official Miss Germany Camp 2020. The candidates will enjoy all that Somabay has to offer – sea & beach, water sports, spa, golf and delicious culinary treats. The Miss Germany Camp is hosted at The Lodge by The Cascades Golf Resort, Spa & Thalasso introducing the candidates at a glittering evening event on 31 January.

Hedge funds deliver best returns in a decade but still fail to match equities: Investors withdrew USD 43 bn from hedge funds last year even though the industry delivered its best annual performance for a decade, the Financial Times reports. Hedge funds returned 10.4% after fees in 2019, well below the 31.5% return posted by the S&P 500 and the 16.6% return delivered by 50/50 global equity bond index. Years of underperformance by hedge funds since the 2007-08 financial crisis have prompted institutional investors to pull capital from the industry, the FT says.

Is the Fed winding down its repo intervention? The Federal Reserve Bank of New York injected another USD 74.2 bn of temporary liquidity into the money markets on Thursday, reports the Wall Street Journal. Despite this, the amount of liquidity dropped by USD 10 bn to USD 176.1 bn as past operations expired. The Fed was expected to bring its repo intervention to a halt at the end of January but recently extended the program until the middle of February. The bank began supplying cash last September after surging short-term borrowing costs threatened to paralyse the interbank lending market. Need more info on the repo rate? Read our primer.

Goldman sets diverse board representation as requirement to advise on IPOs: US investment bank Goldman Sachs said on Thursday it won’t take on IPOs of European and North American companies without at least one board director who is not a straight, white male, according to Axios. Some 60 companies have gone public in the past two years with entirely non-diverse boards, despite studies showing that more diverse leadership leads to better company performance, according to the bank’s CEO David Solomon.

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US basketball legend Kobe Bryant dies, 41, in helicopter crash: Bryant and his 11 year-old daughter were among five people killed yesterday when their private helicopter crashed in Calabasas, California. The retired star was widely recognized as one of the greatest players of all time, having won the NBA five times and the Olympic gold twice over his 20-year career. The New York Times has live updates here.

Libya ceasefire all but over as clashes erupt in Misrata: Officials from Libya’s rival factions yesterday reported renewed clashes in Misrata, a strategic city to the east of Tripoli, according to the Associated Press. The fighting came hours after the UN accused a number of countries of breaking the arms embargo agreed at last week’s conference in Berlin.

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*** It’s Blackboard day: We have our weekly look at the business of education in Egypt, from pre-K through the highest reaches of higher ed. Blackboard appears every Monday in Enterprise in the place of our traditional industry news roundups.

In today’s issue: We reveal how the Higher Education Ministry plans to implement a central UCAS-style admissions system for private and nonprofit universities.

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