What we’re tracking on Thursday, 12 March 2020
What, you thought a little bit of rain (or the whiff of the apocalypse in the air) would keep us out of your inboxes?
Businesses, government, banks and the EGX are all closed today thanks to fears of inclement weather, according to statements by the central bank, the EGX and the cabinet. Thursday had been declared a school holiday earlier this week after the national weather service said that sandstorms and heavy rains would hit the country today. With the press and policymakers invoking the specter of the , the government has declared an emergency and set up operation rooms in every governorate nationwide, Local Development Minister Mahmoud Shaarawy said at a press conference picked up by Youm 7.
Rain began in the capital city a little after midnight and is intermittent in the People’s Democratic Republic of Maadi as we hurtle toward our dispatch deadline this morning. Twitter tells us the rain near dispatch time is heavy in El Wahat, moderate in Sheikh Zayed and light in Cairo.
The weather service says we could still see heavy rainfall: We could see total rainfall of more than 45 mm in Cairo (more than last October), and 70 mm in Matrouh and other points on the North Coast.
While you were sleeping, things got more than a little nutty on the covid-19 front: Flights between Europe and the US are suspended, shops across Italy are closed and Asian stocks and US futures are tanking: We may have found a new winner for the worst day of covid-19 yet.
The World Health Organization (WHO) has officially declared the covid-19 outbreak a global pandemic. “In the days and weeks ahead, we expect to see the number of cases, the number of deaths and the number of affected countries to climb even higher,” WHO Director-General Tedros Adhanom Ghebreyesus said. More than 126k people worldwide have now tested positive for the virus, with 4.6k having died as a result and 67k having recovered. You can read the WHO’s statement here.
The United States has banned flights to Europe for a 30-day period starting on Friday at 11:59pm, with only aircraft heading to the UK exempted. Oil prices plunged nearly 6% in the minutes after the announcement. There’s more:
- The US has issued a travel warning urging its citizens not to leave the country;
- The NBA has cancelled its season;
- Italy has ordered all shops and restaurants across the country to close;
- Germany’s Angela Merkel said up to 70% of Germany could become infected;
- The actor Tom Hanks announced that he and his wife have tested positive for covid-19 in Australia.
The flight ban leads the front pages of news sites the world over this morning.
Markets are tanking in the wake of the flight ban. Asian markets including Japan, Hong Kong and China are down anywhere 2-4% at the moment and futures point to a heavy sell-off when markets open in Europe and the United States today. This comes after the Dow entered bear territory yesterday, defined as 20% down from its record high in February. US markets all closed deeply in the red yesterday, while the EGX was down 0.1% as it erased at the close the gains it had made earlier in the day
HERE AT HOME: We now have 67 total recorded cases in Egypt, after another eight patients tested positive, including seven Egyptians and one foreigner, the Health Ministry said in a statement. Each is apparently a case of community transmission. Meanwhile, Egypt reported one patient has officially recovered after receiving medical care, joining 26 others who did the same earlier this week.
The Education Ministry has suspended some extracurricular activities at schools as a precaution, a cabinet statement said without elaborating. In a clarification to Masrawy, Education Minister Tarek Shawky said the ministry was referring to after school physical education, music and computer science programs, which are on hold as part of the ban on large gatherings. Friday prayers are still expected to take place tomorrow.
Face masks are being distributed to Cairo metro workers and passengers at peak times, and authorities are undertaking extra cleaning efforts, Ahram Online reports.
Cityscape Egypt announced it is pushing back its 18 March real estate exhibition and will reschedule for a date later this year.
Health insurance providers in Egypt may not pay out in case of infection or death if covid-19 is declared a pandemic, Misr Life Insurance Chairman Ahmed Abdel Aziz told Al Mal. The story was filed just before the WHO declared that the virus is, indeed, now pandemic.
We are seeing a spate of new cases abroad that have connections to Egypt. Nine travelers from a Hong Kong tour group that recently visited Egypt and their guide have either been infected or tested preliminarily positive for the virus. And in Iowa, five new cases of the illness were identified on Tuesday evening, with all of those affected having been together on a cruise in Egypt. Seven existing covid-19 cases in Iowa were individuals who had been on the same cruise, local media reports.
Egypt is now the sixth-largest connection to covid-19 cases in the US, according to data from the New York Times.
We’re need to start asking ourselves whether (and when) we can start working from home as “flattening the curve” through extreme “social distancing” (no hugs, no work from the office, no shops and malls) may be the only thing that prevents the widespread transmission of covid-19. Check out this piece from Stat’s excellent Helen Branswell.
Across Africa, fears of a rapid spread of the virus abound. The continent is home to 16% of the world’s population but only 1% of global healthcare spending, and resources to tackle an outbreak are scarce, according to Bloomberg. The IMF has pledged to make USD 10 bn available at zero interest to help poor countries fight the illness, and the WHO has supplied testing equipment and training across the continent. Crowded urban areas, a low doctor-patient ratio and a lack of resources are reasons to be concerned.
A rare note of positivity: In Wuhan — the Chinese city that was the epicenter of the pandemic — workers in critical sectors are being allowed to return to work following President Xi Jinping’s visit on Tuesday, Reuters reports. Other regions in the country have since also lowered emergency response levels and eased travel restrictions.
Policymakers around the world are sounding the rallying cry to avert a global recession: The UK government and Bank of England yesterday announced coordinated stimulus measures in a bid to mitigate the effects of covid-19 on the UK economy. The BOE followed the US Federal Reserve in making an emergency 50 bps rate cut, and announced cheap funding for the banking sector, a freeze on bank dividends and lowered capital requirements. In the government’s annual budget statement, UK Chancellor Rishi Sunak announced a GBP 30 bn (c. USD 39 bn) fiscal stimulus package, GBP 12 bn of which will be allocated to fighting covid-19 and at least GBP 5 bn for the National Health Service.
A model for other central banks to follow -El Erian: The always-on-point Mohamed El Erian writes for Bloomberg that the UK’s twin responses of monetary and fiscal stimulus “set an important example for other central banks” for how to manage the crisis. The large fiscal stimulus package, the decision to increase coordination between the Bank of England and the Treasury and new central bank measures to support small businesses “are part of the necessary comprehensive response” that should be replicated around the world, he writes.
The ECB is very likely to follow suit this afternoon when it meets to decide rates: ECB boss Christine Lagarde signaled that the central bank will be taking steps that would take into account all possible tools to shore up the bloc’s economy, especially measures to support liquidity and access to credit — including providing “super-cheap” funding, according to Bloomberg. Lagarde warned that the world facesa crisis not unlike the 2008 financial crash if policymakers don’t start working on a coordinated response.
Bank of Japan to take easing to new extremes: The BOJ will likely greenlight further stimulus measures when it meets next week, taking its hyper-easing strategy to new levels. Interest rates are at negative 0.1% and the bank already holds USD 279 bn in stocks on its books, but sources told Reuters that one of the measures the bank could take is ramping purchases of ETFs.
All eyes on the Fed next Wednesday: Traders expect the Fed to cut rates by another 75 bps to just 0.25-0.5% when it meets on 17-18 March.
Where does Egypt stand? Analysts are split on what the CBE would do when it meets on 2 April after inflation slowed down in February, beating most expectations. Those in favor of a rate cut argue that policymakers will make protecting economic activity a priority, considering moves being taken by other central banks.
Others forecast that the Central Bank of Egypt will maintain rates, citing pressure on Egypt’s three key sources of foreign currency — tourism income, remittances from Egyptians abroad, and foreign inflows into government debt. “We expect the CBE to pause the easing cycle as it waits to assess the new threats to both the Egyptian and the global economic performance,” Pharos Holding said in a research note yesterday. Pharos believes the CBE can’t afford to cut rates, despite global monetary easing — high rates will keep the carry trade here and ease pressure on the EGP.
Saudi ratchets up oil price war: Saudi Aramco announced yesterday that it would raise its output capacity to 13 mn bbl/day, up from the record 12.3 mn bbl/d it already announced this week, striking another blow in the country’s ongoing oil price war with Russia. Aramco didn’t say when the capacity increase would take place, but analysts have said it may take years and require bns in investment.
The news sent the price of Brent crude plummeting 3.2% to USD 36.04 bbl. Aramco’s share price was also down 0.32% yesterday, having dropped 4.8% since last week.
Putin pushes legislation to keep himself in power until 2036: Russia’s lower house of parliament approved on Wednesday a constitutional amendment that would allow President Vladimir Putin to stay in power until 2036, according to The Wall Street Journal, giving him a 36-year run in the position. The proposal was put forth by MP Valentina Tereshkova and quickly embraced by Putin who says that Russia “has had enough revolutions” and his prolonged rule would guarantee internal stability.
Egyptian couple get Guinness World Record as married squash world champions: Tarek Momen, 32, and Raneem El Welily, 31, have been recognized as the ‘first married couple to become squash world champions’ bagging a Guiness World Record for Egypt, according to Gulf News. Momen won the 2019-20 Professional Squash Association men’s world champion trophy last November while El Welily won the 2017 women’s World Open winner and topped the world rankings in September 2015.