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Tuesday, 16 February 2021

What the markets are doing on 16 February 2021

Less than half of Lebanon’s large banks expect to meet the central bank’s new capital requirements when they are introduced at the end of this month, which Reuters says “underscores the scale of the problem facing Lebanon’s banks, heavily exposed to one of the world’s most indebted states and starved of funding.”

It’s Hawks vs. Doves in the EM-verse: Several emerging-market central banks are likely to follow in Turkey’s footsteps and tighten monetary policy this year, according to Bloomberg Economics forecasts. Argentina, Brazil, and Nigeria are all expected by the business news information service to raise rates at some point this year, while China, Indonesia, India, and Mexico will remain dovish and could move to further reduce rates.

Currency markets have returned to their pre-pandemic calm even as equities remain volatile: Indices that measure volatility in US stocks and in currencies — which over the past decade have risen and fallen in tandem — have recently become detached, with Eurodollar volatility falling and the VIX remaining elevated. The Wall Street Journal suggests that the weak USD is responsible for the lower currency volatility, something could change should the US economy recover faster than expected or investors anticipate a rise in interest rates.

Luxury goods baron + banker are latest to push Europe on the USD 100 bn SPAC bandwagon: LVMH chairman and current owner of legacy brand Louis Vuitton Bernard Arnault is teaming up with former UniCredit boss Jean Pierre Mustier to launch a special purpose acquisition company (SPAC) to invest in EU financial companies, Mustier told the Financial Times. The SPAC, Pegasus Europe, will be sponsored by Groupe Arnault and listed in Amsterdam, which has been emerging as the European hub for SPACs as trading shifted away from post-Brexit London.

Europe is expected to witness a wave of new SPACs as the bloc catches up with what has predominantly been a US phenomenon. The SPAC craze set records in 2020, a year which saw 143 of the blank-check companies attract more than USD 44 bn. And there are at least another 113 firms looking to raise USD 30 bn lining up for IPOs. Not clear on what SPACs are? Check out our explainer here.

Up

EGX30

11,527

+0.2% (YTD: +6.3%)

None

USD (CBE)

Buy 15.56

Sell 15.66

None

USD at CIB

Buy 15.55

Sell 15.65

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

9,082

+0.5% (YTD: +4.5%)

Down

ADX

5,649

-0.3% (YTD: +12.0%)

Up

DFM

2,642

+0.7% (YTD: +6.0%)

Up

S&P 500

3,935

+0.5% (YTD: +4.8%)

Up

FTSE 100

6,756

+2.5% (YTD: +4.6%)

Up

Brent crude

USD 63.54

+0.4%

Up

Natural gas (Nymex)

USD 3.07

+5.3%

Up

Gold

USD 1,825.10

+0.1%

Up

BTC

USD 48,372.93

+3.39%

The EGX30 rose 0.2% yesterday on turnover of EGP 1.6 bn (10.1% above the 90-day average). Foreign investors were net sellers. The index is up 6.3% YTD.

In the green: MM Group (+11.2%), Fawry (+2.4%) and Palm Hills Development (+1.2%).

In the red: Export Development Bank of Egypt (-1.7%), ElSewedy Electric (-1.4%) and Sidi Kerir Petrochemicals (-1.4%).

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