What we’re tracking on 28 April 2020
BIG NEWS AT HOME- Egypt is reportedly looking to get USD 3 bn from the International Monetary Fund under the one-year rapid financing instrument and the stand-by arrangement that the government has requested, according to a report in Al Shorouk citing an unnamed government official. Prime Minister Moustafa Madbouly did not disclose the size of Egypt’s funding request to the lender, but analysts expect the figure to range between USD 2.8 bn and USD 4 bn.
BIG NEWS ABROAD- There are (very early) suggestions that the first several mn doses of a vaccine could be available in September. “In the worldwide race for a vaccine to stop the coronavirus, the laboratory sprinting fastest is at Oxford University,” former NYT Cairo bureau chief David Kirkpatrick writes for the Gray Lady this morning, noting that researchers at the Jenner Institute “now say that with an emergency approval from regulators, the first few mn doses of their vaccine could be available by September” — if it works. The Oxford team expects to kick off mass clinical trials of their vaccine by the end of May.
Why is the Oxford team so optimistic its vaccine might work? Because scientists in the US last month “inoculated six rhesus macaque monkeys with single doses of the Oxford vaccine. The animals were then exposed to heavy quantities of the virus that is causing the pandemic — exposure that had consistently sickened other monkeys in the lab. But more than 28 days later all six were healthy.” The story comes as the global case count for covid-19 broke the 3 mn barrier overnight.
Big news to start a very, very slow newsday — you’re reading what we figure is the shortest issue of Enterprise in … three or more years.
MORNING MUST-READ- It’s time for companies to shift from “just in time” to “just in case,” the Financial Times’ editorial board writes. In the pursuit of “maximum shareholder value” and “efficiency,” businesses have “sacrificed robustness, resilience and effectiveness. In many cases, they will turn out to have sacrificed the business itself.”
Investors are going to “shun fragile business models. Equity and bond markets are already discriminating sharply in favour of fundraising requests from companies with strong balance sheets and high credit ratings.” Winners could be those who are not just robust and flexible, but actively “anti-fragile” — outfits that can thrive and grow on chaos, if you want to oversimplify Nassim Nicholas Taleb’s Antifragile: Things That Gain from Disorder.
Got fasting brain and not in the mood to read Antifragile? Start with this video of a presentation and panel discussion featuring Taleb back in 2013 (watch, runtime: 19:19) or this longer presentation by Taleb Microsoft Research (watch, runtime: 1:05:53). Got time? Watch the longer talk.
The markets this morning: Asian markets are down in early trading this morning and futures at dispatch time suggest Europe will open in the green and US shares in the red later today. The EGX30 closed flat yesterday with total turnover of about EGP 1 bn, or 51% above the trailing 90-day average.
So, when do we eat? Maghrib prayers are at 6:31pm and you’ll have until 3:40am to finish caffeinating. Fajr is coming one minute earlier every day through the end of the Holy Month.
COVID-19 IN EGYPT-
Egypt has now identified a total of 4,782 confirmed cases of covid-19 after the Health Ministry reported 248 new infections yesterday. The ministry also said that another 20 people had died from the virus, the highest single-day death toll to date, taking the total number of deaths since the outbreak began to 337. We now have a total of 1,602 confirmed cases that have since tested negative for the virus after being hospitalized or isolated, of whom 1,236 have fully recovered.
A journalist for Al Khamis newspaper is among the dead, State Information Service and Journalists’ Syndicate chief Diaa Rashwan said. Al Masry Al Youm has the story.
The Coptic church has reported two clergy members are the first church officials to have been infected with the virus that causes covid-19, Ahram Online writes.
The Foreign Ministry has resumed notary services as of Sunday following Prime Minister Moustafa Madbouly’s decision last week to relax some covid-19 restrictions throughout Ramadan, according to the local press. The office provides authentication services for Egyptian documents that need to be submitted to foreign agencies and institutions, such as diplomas and marriage certificates.
Some Justice Ministry registry offices are also now open, but offering a limited list of services.
Still closed: Passport services for nationals as well as visa and work permits for foreign residents.
The Egyptian Businessmen’s Association is lobbying Cabinet for a raft of measures to support businesses struggling with the impact of the covid-19, according to Hapi Journal. Among the measures proposed by the association:
- Postponing payments on land plots for real estate developers for six months and extending the completion deadlines of real estate projects one year;
- Charging a single, unified price for natural gas regardless of industry;
- Allowing tech-focused companies to apply for help under the Central Bank of Egypt’s stimulus package and SME support initiative;
- Imposing measures to curb imports of products that have domestic alternatives and take a tighter approach on the anti-dumping front;
- Collecting dues from foreign tour operators to Egyptian companies and hotels.
Nestlé Egypt has temporarily suspended operations at one of its 6 October factories after confirming cases of covid-19 among factory employees, according to Al Masry Al Youm. The company is disinfecting its facility and will resume work as soon as possible.
Some 2.5 mn day laborers have received the first of three EGP 500 monthly stipends ordered as part of the national bailout package for covid-19, Manpower Minister Mohamed Saafan told MENA. Distribution of the second of the three payments started yesterday. The ministry has also disbursed EGP 57 mn to 48k workers in the tourism industry from its emergency fund, a cabinet statement said.
The domestic press gave wide attention yesterday to the Tourism Ministry’s decision to yank the license of an unnamed hotel in Sharm El Sheikh for allegedly having laid off workers despite having been directed to stay at full employment and seek bailout funding from the government.
DHL Egypt is teaming up with Baheya Cancer Hospital to deliver meds and other supplies to cancer patients at home, according to a statement (pdf). The partnership is meant to protect patients from the risk of covid-19 infection.
IN OUR REGION-
The impact of falling oil prices is ricocheting around the Middle East, the Associated Press writes, saying that Iraq is risks further bouts of social unrest as it plans severe cutbacks to social programs, Saudi crown prince Mohamed bin Salman’s reform ambitions have come to a juddering halt, and remittances to Egypt, Jordan and Lebanon from Gulf workers are under threat.
Protesters in Lebanon’s Tripoli smashed bank storefronts and set at least one on fire in protests overnight that Reuters says were “fuelled by Lebanon’s economic crisis.” Banks in the city are shut starting today “until security is restored.”
Prepare for more unrest: The disruption is likely to give way to destabilization in the hardest hit countries in the Middle East, with Algeria, Iraq and Lebanon likely to face particularly incendiary responses from their publics, Andrew England writes in the FT. “The coronavirus has exposed the fragility of the social safety-net systems across the region,” said Lina Khatib, head of the Middle East programme at Chatham House. “Covid-19 has postponed the inevitable unrest to come.”
GCC countries are ready to flog state assets to prop up finances, Citi says, in bids to ease pressure on public finances, Bloomberg reports. GCC countries have already sold USD 47 bn in bonds this year with more than half of that coming from Saudi Arabia, Qatar and Abu Dhabi in just the past month.
ON THE GLOBAL FRONT-
Think the recent IMF forecast was bad? Bloomberg just went one step further: The global economy will contract by 4% this year, resulting in more than USD 6 tn in lost output, according to a Bloomberg Economics estimate. The IMF earlier this month forecast global economic activity to fall 3% through 2020 but Bloomberg now warns of a deeper recession “of unprecedented speed and severity.”
This apparently is the optimistic view: The estimate is based on the “optimistic assumption” that the economy begins to recover in the second half of the year. This is hardly a given though: As governments begin to relax the restrictions that have crippled economic activity the risk of a second wave of infections is high. This could cause the world economy to contract by an even deeper 5.6%, and if the policy responses are insufficient we could be looking at a staggering 7.2% drop in output. “Governments should err on the side of doing too much stimulus. In the end, the cost of doing too little would be higher,” the report says.
And this is exactly what they’re doing:
- Bank of Japan takes a leaf from the Fed’s playbook, promises unlimited bond-buying: The Bank of Japan yesterday pledged to buy unlimited amounts of government debt and expand corporate bond purchases fourfold in response to the “grave effect” of the coronavirus on the Japanese economy, the Financial Times reports.
- ECB expected to hoover up junk bonds: Economists expect the European Central Bank to expand its EUR 750 bn pandemic bond-buying programme to include high-yielding corporate debt, the FT says.
US oil prices dipped again, with WTI June futures shedding nearly 24% to settle at USD 12.78 yesterday after the world’s biggest oil-backed exchange traded fund announced offloading short term contracts over price fears, according to the Financial Times. The United States Oil Fund said it has moved to dispose of all its futures for delivery in June.
It’s crazy enough out there that Egypt has just flipped to become a net exporter of gasoline: The Middle East Oil Refinery and the Egyptian General Petroleum Corporation are back in the spot market and are dumping gasoline cargoes into the Gulf, S&P Global Platts reports, citing market sources. “Egypt’s transition from an importer to an exporter of gasoline comes as more severe measures have been taken to curb the spread of the coronavirus. Exacerbating matters for Egyptian refiners, Europe is facing a glut of motor fuel, and with Egyptian barrels often not meeting European specifications and the possibility of high sulfur, homes for the fuel are limited in the west, with storage east a possibility.”
European banks are preparing for a deluge of non-performing loans, the FT reports.
Global aviation could take two or three years to recover to pre-pandemic levels, Boeing CEO David Calhoun said, according to the Wall Street Journal.
EGYPT BEYOND COVID-
The House of Representatives’ general assembly is set to begin discussing the Banking and Central Bank Act next week, House Economic Committee member Rep. Hassan El Sayed told Al Mal. The latest draft of the bill we saw came a long way from when it was proposed in 2017 and would grant the Central Bank of Egypt greater oversight of the sector, introduce measures governing e-payment, fintech businesses, and cryptocurrencies, and strengthen data protection and consumer privacy.
It remains unclear whether a mooted tithe on bank profits to endow an industry development fund will be part of the version of the legislation that goes before lawmakers next week.
President Abdel Fattah El Sisi signed off yesterday on a three-month extension of the nationwide state of emergency, according to Al Masry Al Youm. The House of Representatives had approved the extension earlier this month.
AND IN THE REST OF THE WORLD-
Is North Korea getting its first woman ruler? Uncertainty surrounding the health of North Korean leader Kim Jong Un is spurring questions on whether the nation could see his sister become the first woman ruler, according to Bloomberg. The Financial Times also has a look at Kim Yo Jong, 32, writing that she “was a favourite of her father, late leader Kim Jong Il, who admired her intelligence” who has been “groomed for power since her teens.”