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Monday, 15 March 2021

What the markets are doing on 15 March 2021

Short sellers are circling SPACs, with the value of short positions being taken against SPAC shares tripling to USD 2.7 bn since the start of the year, according to financial data provider S3 Partners, the Wall Street Journal reports. Post-IPO companies are attractive for short sellers because SPAC investors are keen to sell shares and ensure a payoff. Shorting SPACs has become so popular that Goldman Sachs has begun offering similar bundles of stocks to short as a SPAC hedge.

2021 hasn’t been kind to the SPAC market: A recently-launched index that tracks SPACs is down 20% from its peak in February, putting the market in bear territory and raising speculation that one of the most feverish trades on Wall Street may be running out of steam.

Conditions aren’t right for a commodities supercycle, the Wall Street Journal writes, saying that the absence of major industrial expansion and the likelihood of another slump in oil demand makes a long-term climb in the price of commodities unlikely. Though commodity prices have seen strong gains since a covid-induced crash last year, the upward turn is likely to taper off as the global economy recovers and fiscal stimulus packages are phased out, he says.

That’s a good thing as far as Egypt’s concerned: Analysts we talked to earlier this month said that the Egyptian economy is heavily exposed to the rising inflation that accompanies higher commodities prices due to its reliance on imports.

US tech stocks could fall into a bear market if US treasury yields continue to rise: That’s according to a recent note by Ned Davis Research, which claims that the Nasdaq could drop as much as 20% if the yield of 10-year US treasuries rise another 50 bps to 2%. The forecast is based on an inverse relationship between bond yields and equity risk premiums, and the research house calculates that if the 10-year treasury yield tops 2% (from 1.52% last Thursday) — a level it believes we will see — the index will need to fall by 20% (which is the technical definition of a bear market) to make both yields equivalent.

What’s driving the crypto pop? Look no further than stimulus, Elon, short-sellers giving up, and “weekend liquidity,” one analyst tells Bloomberg. Bitcoin popped to an all-time high of USD 61.6k on Saturday, bouncing back from a rout in late February following a previous peak set that month. The valuation surge isn’t enough to push widespread adoption of the cryptocurrency, which market watchers say is now “a giant stimulus-fueled bubble on track to burst like it did in the 2017-2018 boom-and-bust cycle.”

Up

EGX30

11,290

+0.3% (YTD: +4.1%)

Down

USD (CBE)

Buy 15.63

Sell 15.73

Down

USD at CIB

Buy 15.62

Sell 15.72

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

9,665

+0.8% (YTD: +11.2%)

Up

ADX

5,684

+0.8% (YTD: +12.6%)

Up

DFM

2,600

+1.0% (YTD: +4.4%)

Up

S&P 500

3,943

+0.1% (YTD: +5.0%)

Up

FTSE 100

6,762

+0.4% (YTD: +4.7%)

Up

Brent crude

USD 69.99

+1.1%

Down

Natural gas (Nymex)

USD 2.55

-1.9%

Up

Gold

USD 1,728.20

+0.5%

Down

BTC

USD 60,162.63

-1.24%

The EGX30 rose 0.3% yesterday on turnover of EGP 897 mn (39.6% below the 90-day average). Local investors were net sellers. The index is up 4.1% YTD.

In the green: Fawry (+6.8%), Orascom Development (+5.7%) and Sodic (+4.7%).

In the red: CI Capital (-7.3%), AMOC (-2.6%) and Orascom Investment (-2.5%).

Asian markets are mixed at the start of this trading week, with Shanghai and Korea’s Kospi in the red and the Nikkei and Hong Kong in the green. Futures point to a mixed open in Europe, while Wall Street and Bay Street are set to start the week in the green.

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