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Thursday, 24 September 2020

What we’re tracking on 24 September 2020

Good morning, friends, and welcome to interest rate day, where the consensus is that the Central Bank of Egypt will leave rates on hold when its Monetary Policy Committee meets later today. All 11 economists and analysts surveyed in our poll said rates will likely remain unchanged as the central bank looks to support the EGP and protect the carry trade. A subsequent Reuters poll suggested much the same.

The IMF will be back in town at the end of the year: An IMF delegation will visit Egypt in December to conduct the first of two reviews ahead of disbursing the second USD 3.2 bn second tranche of the one-year, emergency USD 5.2 bn stand-by loan agreed earlier this year, Finance Minister Mohamed Maait told Al Shorouk. Egypt onboarded the first, USD 2 bn tranche of the loan in July to help cushion the economic fallout of covid-19.

EFG Hermes’ virtual investor conference is on its fourth day, with more than 650 institutional investors with aggregate AUM north of USD 17 tn connecting with top listed companies to chew over how things look in frontier and emerging markets. The conference runs until next Thursday, 1 October. You can visit the conference website here.

US stocks plunged yesterday for the fifth time in six sessions amid signs business activity is cooling and that lawmakers aren’t going to roll out more stimulus. The S&P and the Nasdaq both fell more than 2%. Asian shares are down in early trading this morning, and futures point to more of the same in Europe later this morning.

VACCINE WATCH- We’ll learn more about Russia’s Sputnik V vaccine in the coming days when Russia’s sovereign wealth fund holds a conference on the vaccine, the date of which was not specified, Al Mal reports. Egypt is in talks with Moscow to get its hands on the vaccine and is among the countries expected to take part in phase 3 clinical trials. Pfizer is about to start phase three trials of its vaccine, applying more extensive data analysis, perhaps paving the way for regulatory approval soon after October, Reuters reports. And phase three trials of Johnson & Johnson’s single-shot vaccine started yesterday, the company said in a statement.

There’s one big caveat to all of this talk of phase three trials: Kids aren’t covered, according to the New York Times, which writes that a vaccine for children may not arrive before fall 2021, saying that “no trials have yet begun in the United States to determine whether these vaccines are safe and effective for children.” The best primer on covid vaccines: How close is a coronavirus vaccine?

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The Health Ministry reported 121 new covid-19 infections yesterday, up from 113 the day before. Egypt has now disclosed a total of 102,375 confirmed cases of covid-19. The ministry also reported 16 new deaths, bringing the country’s total death toll to 5,822. We now have a total of 91,843 confirmed cases that have fully recovered.

Egypt’s tourism rebound is outperforming its regional peers and the country has contained covid-19 cases among foreign visitors “quite well,” Tourism Minister Khaled El Enany said in an interview with Business Media Georgia (watch, runtime 6:01). Egypt has seen some 250k tourists visit Sharm El Sheikh and Hurghada since resuming flights in July, and as of late August, only a single suspected case of the virus had been detected among foreign tourists.

France will allow flights to Egypt’s coastal cities to resume in October, El Enany said in a statement yesterday.

The Education Ministry has extended until 1 October the deadline for students to transfer between schools, Youm7 reports, citing a ministry statement. The new academic year for public schools begins on 17 October and runs until 24 June 2021, with the mid-year break from 6-18 February 2021. The ministry has also distributed safety plans to some 60k schools, in collaboration with the health ministry, with guidelines on classroom capacity and distancing, Mubasher reports, citing Education Minister Tarek Shawki, who spoke during a virtual session of the MENA Innovation and Technology Transfer (MITT) Summit.

A resurgence in covid-19 cases is threatening to dent the Eurozone’s economic recovery, with the block’s flash PMI data (pdf) for September falling to 50.1, down from 51.9 in August. The EU’s composite purchasing managers index aggregates activity in the services and manufacturing sectors. The reading — which remains in expansionary territory despite the dip — suggests the “initial rebound” after the lifting of lockdown measures is not here to stay, says Bloomberg. Governments have reintroduced some lockdown measures after cases began rising in recent weeks.

The world’s poorest countries could be getting tailored debt restructuring plans from large private lenders to resolve “fundamental solvency concerns,” Reuters reported, citing a letter sent by the Institute of International (IIF) to G20 governments. A one-size-fits-all debt relief package would make it harder for riskier borrowers to access capital markets, making a case-by-case review more appropriate, the group said. This comes as creditors from around the world are expected to extend a debt relief initiative first announced in April, and from which north of 70 of the poorest countries have benefited.

Around our region:

  • The UAE is facing a deeper-than-expected economic contraction this year: The country’s central bank now projects GDP to shrink 5.2%, down from its previous 3.6% forecast, Bloomberg reports.
  • Kuwait downgraded: A worsening liquidity crunch in Kuwait and a delay in legal authorization to issue new debt led to the country’s first-ever credit rating downgrade from Moody’s, the ratings agency said in a statement.
  • Abu Dhabi-based KBBO Group — previously the largest shareholder in embattled NMC Healthcare — has a USD 2 bn debt pile it’s looking to restructure. The group has tapped Bruno Navarro as its chief restructuring officer to get the job done, Bloomberg reports, citing unnamed sources.


US ELECTION WATCH- Donald Trump refused to commit to a peaceful transfer of power in the event he loses the 3 November election to Joe Biden, telling reporters at the White House “We’re going to have to see what happens. The story is front-page news for the Financial Times and Reuters. Little wonder the election is being priced as “the worst event risk” in the history of the US volatility index as traders increasingly expect “some pretty incredible fireworks” in the aftermath, Bloomberg writes.

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