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Tuesday, 28 July 2020

What we’re tracking on 28 July 2020

It’s almost official, folks: The cabinet confirmed yesterday that Eid Al Adha will run from Thursday to Monday, 3 August , meaning that we should all be getting five days’ holiday. We are however yet to hear anything from the EGX and the central bank, and the Manpower Ministry hasn’t yet confirmed the holiday for the private sector.

FRA committee to meet for first time since the onset of corona next week: The Financial Regulatory Authority’s (FRA) advisory committee will discuss “the most important” files when it holds its first meeting since the start of the covid-19 pandemic next week, committee member and industry lobby group the Egyptian Capital Markets Association (ECMA) Chair Mohamed Maher said, according to Al Mal.

We’re not sure yet what is on the agenda, but we expect proposals to stimulate the local bond market to get some attention. Maher said earlier this month that the regulator was close to finalizing a set of measures to encourage trading in the local bond market, including tax exemptions, reducing trading fees, and increasing the range of tradable securities.

On a related note: The ECMA is pushing for more clarity on plans by the Central Bank of Egypt to pump EGP 20 bn into the stock market, Maher said. The CBE announced the stimulus plan during the height of the corona-induced market instability in March, but Maher suggested yesterday that the bank is yet to provide any support. The ECMA is also lobbying the CBE to give brokerage firms access to soft loans it provides to other industries to help them cope with low trading volumes.

The Mostaqbal Watan Party looks set to dominate next month’s Senate elections, with 95 of its members vying for the 100 individual seats up for grabs in the 300-member chamber. The National Elections Authority (NEA) announced on Sunday that bids from 787 candidates have been accepted. Continued restrictions on public gatherings mean that no public rallies can be held, but candidates can hold closed sessions or campaign door-to-door.

The US Federal Reserve begins its two-day meeting today to review interest rates. No major policy adjustments are expected, but officials have been making noises about ramping up bond-buying to hold down interest rates in what’s known as yield-curve control.


COVID-19 IN EGYPT-

Covid-19 cases continue to fall: The Health Ministry yesterday confirmed 420 new cases of covid-19, down from 479 on Sunday. This brings the nation’s total confirmed cases to 92,482. The ministry also reported 46 new deaths yesterday, increasing the overall death toll to 4,652. We now have a total of 34,838 cases who have fully recovered.

Russian flag carrier Aeroflot is expected to start taking bookings to Cairo from 8-9 August, after Moscow announced it would resume international air travel from next month, Mubasher reports, citing MENA.

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ON THE GLOBAL FRONT-

The surge in cases in the US sunbelt is showing signs of abating, with Florida, California and Arizona all reporting slightly lower cases yesterday, the Financial Times reports. Nationwide, yesterday saw the smallest daily increase in three weeks, with 55,134 people testing positive for the virus.

The World Health Organization warned countries that they cannot leave travel suspensions in place indefinitely, and urged governments to do more to tackle the virus within their borders, Reuters reports.

Keeping your company safe in the age of WFH: Companies are looking to AI-powered software, cloud solutions, and privacy screens to protect their data from hackers as WFH forces them to search for new ways to keep workforces and their company secrets safe, reports CNBC. Other companies are introducing more stringent background checks on new hires, and are more closely monitoring employees.

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GLOBAL MACRO-

Republicans unveil USD 1 tn stimulus package: Republican lawmakers in the US Senate have proposed cutting jobless benefits as part of a USD 1 tn stimulus package, setting up a confrontation with congressional Democrats staunchly opposed to reducing support for the unemployed. The proposals would send another round of USD 1.2k checks to most citizens, but slash the weekly USD 600 unemployment benefit to just USD 200 until September, after which workers would be paid 70% of their previous wages. Democrats want to maintain the current unemployment benefit until January (New York Times | Wall Street Journal | Financial Times | Bloomberg | Washington Post).

Gold prices hit a new record high yesterday as increasing fears for the US economic recovery sent investors piling into the safe haven asset, the FT says. The price of the precious metal reached new highs of USD 1,945.16 per ounce during trading, surpassing the previous high of USD 1,921 set in September 2011.

The rally isn’t done yet, according to analysts who told CNBC that prices could surge past USD 2k per ounce this year.

The spike in gold prices coincided with a drop in the USD, which fell to a two-year low yesterday. The FT reports that the USD index, which tracks the greenback against a basket of currencies, fell 0.9% to lows not seen since May 2018.

And US treasury yields were driven lower: The yield on the benchmark 10-year note fell to 0.5815% and the 30-year bond to 1.2215% as investors bought into safe haven assets, CNBC reports.

Bitcoin rallied above USD 10k for the first time since early June, rising nearly 11% over the last week, as large investors continued to buy into the market in a bid to push the price past USD 10.5k, according to CNBC.

AND THE REST OF THE WORLD-

Germany-based software developer SAP will IPO its American subsidiary Qualtrics, which specializes in gathering and analysing customer experience data, according to the Financial Times. SAP acquired Qualtrics two years ago for USD 8 bn, in what was one of SAP’s largest transactions. The company’s CFO hasn’t disclosed how much of the company will be listed but said that floating a 10-15% stake would be a “regular size.”

Lebanon’s credit rating has been cut to ‘Venezuela’: Moody’s has downgraded Lebanon’s credit rating further into junk as the country continues to reel from a severe financial crisis, Bloomberg reports. The country’s rating was cut to Ca from C, reflecting the agency’s expectation that investors are likely to take losses of more than 65% on their holdings of Lebanese debt.

Heads are rolling at Intel: The US chipmaker has fired its chief engineering officer less than a week after the company revealed that it had fallen a year behind on its next generation of chips, threatening its position as the world’s premier manufacturer of semiconductors, Bloomberg reports.

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