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Thursday, 6 February 2020

What we’re tracking on 6 February 2020

The business community will be watching closely in the days ahead as regulators raise questions about two transactions that count among the largest M&As ever attempted in Egypt. The Financial Regulatory Authority has apparently required STC to make a tender offer for 100% of Vodafone Egypt. The requirement was triggered after the Saudi network operator entered into an agreement to acquire the 55% stake in Vodafone Egypt help by Vodafone Group.

Meanwhile, the Egyptian Competition Authority is warning prominent healthcare groups Cleopatra and Alameda not to go ahead with a merger, threatening all manner of consequences if they were to do so. The catch: On the numbers, there’s no way to claim the merged entity would have a monopoly on beds. We have the full rundown on both stories in this morning’s Speed Round, below.

It’s official: US President Donald Trump will stay in office after the Senate voted to acquit him yesterday. The vote went largely as expected, with Democrats unanimously voting “guilty” on both charges of abuse of power and obstruction of Congress, and Republicans voting “not guilty” on both. Mitt Romney was the sole Republican Senator to break ranks. The story is front-page news globally this morning. See: The Washington Post | New York Times | Reuters | Financial Times | Wall Street Journal | Bloomberg.

The unfortunately named FEDCOC, ECMA to draft proposal on tax policies to present to FinMin: The Federation of Egyptian Chambers of Commerce (FEDCOC)’s securities division and the Egyptian Capital Markets Association (ECMA) are meeting on Sunday with key stakeholders to look into the future of the provisional stamp tax and dividend tax on EGX transactions, the local press reports. The FEI and ECMA will present to the Finance Ministry their recommendations on these taxes, which will likely include a proposal to either lower or completely scrap the stamp tax to improve market liquidity, division head Awny Abdel Aziz says.

Egypt’s African Union chairmanship ends next week: Egypt will hand the chairmanship of the African Union over to South Africa during a summit of African heads of state scheduled to take place on Sunday and Monday in Addis Ababa. Foreign Minister Sameh Shoukry is in the Ethiopian capital today to take part in preparatory meetings, during which officials will discuss a report on the African Continental Trade Area (AfCFTA) project and the issue of forced displacement in Africa, the ministry said.

Nearly 100 Egyptian companies will participate in the Fruit Logistica Exhibition today in Berlin, the world’s biggest agriculture product expo, according to the local press. The exhibit will run until Saturday.

The Kauffman Fellows are coming to Cairo this month: The global VC group will be in town for a series of networking events taking place on 13-15 February. The visit will kick off with an evening at the pyramids co-hosted by EFG Hermes, Swvl, Marakez and Vezeeta that will bring together a number of local and regional investors, businesspeople and media figures. AI startup and recent Making It guests Elves (who, it turns out, are Enterprise’s near-neighbours) will then host a BBQ on 14 February featuring a number of local startups, before AmCham and Endeavour organize a breakfast on the final day of the visit.


Global stocks are recouping their coronavirus-induced losses, with the US and major European markets rallying yesterday, according to the Wall Street Journal. The Dow Jones Industrial Average rose 1.7%, while the Nasdaq and S&P 500 each hit new record highs by the end of trading. The rally began earlier this week, when the Chinese central bank’s anticipated liquidity injection in the local banking system began assuaging investor concerns over the extent of disruption to global growth from the coronavirus outbreak, the journal said. Investors also began offloading safe haven assets such as gold, particularly as a rising USD makes the commodity more expensive to overseas investors.

The coronavirus will hit oil demand growth by around 300k bbl/d this year according to current estimates, Apicorp Chief Economist Leila Benali wrote in a report. The multilateral development organization forecasts oil prices to trade between USD 55-65 after the second quarter as OPEC+ supply cuts, trade friction and other factors play out. You can find Apicorp’s press statement accompanying the report here (pdf).

Domestic oil demand is also expected to tumble in China, with energy execs anticipating consumption within the country to plunge by as much as 25%, the Financial Times says. The weak domestic demand will likely worsen the situation for the global oil market, which Opec+ is still scrambling to address after Russia rejected additional output cuts to shore up prices, according to Bloomberg.

A total of 490 people have died from the outbreak and there are more than 24k confirmed cases, according to Bloomberg.

Meanwhile, Beijing is still tending to its ongoing fight for economic supremacy against Washington, which isn’t over just because the two signed a preliminary trade agreement, chief economist at Enodo Economics in Longon Diana Choyleva argues in the Financial Times. Choyleva postulates that technology, not trade, will be the real battle arena, which became particularly evident with the US’ crackdown on Huawei. To that end, the White House is working with US tech companies to develop infrastructure and software for 5G telecom networks to undercut Huawei, US President Donald Trump’s chief economic advisor Larry Kudlow told the Wall Street Journal.

Saudi’s first post-Aramco IPO is kicking off: Dr. Sulaiman Al Habib Medical Group, one of Saudi Arabia’s largest private healthcare operators, is set to begin the bookbuilding process for its planned IPO next Monday, Bloomberg reports. The offering will see the company sell a 15% stake of its share capital. The shares will be priced on 20 February. Our friends at EFG Hermes are bookrunners, alongside Jadwa Investment and Riyad Capital. Jadwa and Riyad are also acting as financial advisers on the listing, which will act as a litmus test for investor appetite after Aramco raised more than USD 29 bn last December in the world’s biggest-ever IPO.

Intercontinental Exchange bids for eBay: The holding company that operates the New York Stock Exchange has submitted a takeover offer for eBay that would raise the value of the online marketplace to over USD 30 bn, the Wall Street Journal reports. The company, known as ICE, is not really known for acquiring consumer goods companies but has a reputation for buying underperforming trading platforms and turning profits. ICE’s shares initially tumbled on the news but closed up 0.31%, while eBay’s dipped 0.76%.

Tesla helps buoy EM sell-off: The meteoric rise of Tesla shares since the beginning of the year is helping fend off the worst of the coronavirus stock tumble in emerging markets that saw the MSCI Emerging Markets Index drop 4.7% since 17 January, Bloomberg reports. EV components manufacturers like LG Chem, Samsung SDI, Jiangnan Mould and CATL have largely bucked the trend thanks to Tesla’s performance.

The IMF thinks implementing a carbon tax is the “best way forward” to fight climate change, Bloomberg reports. Governments putting a price on carbon “will encourage households and firms to use less energy and shift to cleaner fuels,” Managing Director Kristalina Georgieva said in an address at Vatican City on Wednesday.

UN Security Council members have drafted a resolution denouncing US President Donald Trump’s Middle East peace plan, saying the proposed Israeli annexation of settlements in the West Bank would be a breach of international law, Bloomberg reports. The resolution, circulated by Tunisia and Indonesia, will likely face a US veto.

PSA- There’s a chance of dusty wind and rainfall this weekend, says the Egyptian Meteorological Authority (pdf). Look for daytime highs of 22°C and overnight lows of 16°C.

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